Most commonly found in the commercial real estate industry, Common Area Maintenance (also known as CAM) is a section of the lease that clearly outlines what a tenant’s pro rata, or proportional, share of the operating expenses of the building will be. It details how the tenant and the landlord will share the costs associated with maintaining the common areas of a space, such as utilities, management fees, repairs and maintenance, landscaping, management fees, and more.
And while this sounds pretty black and white, at times, it can actually be a bit grey and blurry. For instance, the tenant may not be privy to the going market rate for common costs that are being handed from the tenant to the landlord. Similarly, the landlord may not know the current value of the property, at any given time. So, what happens when something unexpected warrants an increase in costs? Do you know that your CAM charges are accurate and fair? How can you be certain?