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Why Is CAM Reconciliation Important For Both Landlords and Tenants?

Posted By: Leah Austin

When you lease a commercial property, you may be responsible for CAM charges and you should inquire whether this is an additional charge before you sign a lease. This charge is for Common Area Maintenance of the property such as snow removal, grass cutting, upkeep of the parking lot or security on the property. All of these expenses are necessary for the safety and well being of your customers. These fees are normally paid monthly, in addition to your regular rent. Most landlords will do a CAM reconciliation at the end of the year to see if charges equal the amount collected from the tenants.

The amount of these charges can be assessed in different ways. You can be charged by your share of square footage, the total amount of occupants in each dwelling or divided evenly between all of the tenants. It is up to the management of the complex to decide how this fee will be assessed to the occupants. When the management does the CAM reconciliation, they will decide if the occupants paid enough to cover all expenses on the property.

The amount of the CAM charges can go up or down each year depending on the upkeep expenses of the property. If the property needs to have the parking lot paved, their expenses are going to be higher. If it should be discovered when the CAM reconciliation is done, the management may decide to charge the tenants a fee at the end of the year to cover the overages. If it is found that the expenses are less than what all the tenants have paid, they will then receive a credit for the amount they overpaid.

By charging these expenses separately from the regular rent, the landlord can quote a lower monthly rent to the tenant. This also will ensure the landlord does not lose money with the operating expenses of the building. Any tenant who leases property where there is a CAM charge should request and review a copy of the CAM reconciliation so that they will see where the money they paid is being spent. If the reconciliation shows new sidewalks were put in and you do not see them, then you would need to question management why you are being charged for them.

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