6 Tips When Dealing With CAM (Common Area Maintenance) Charges

Common Area Maintenance (CAM) charges are frequently going to be a large part of your occupancy costs in buildings that don't have a full service lease structure. While your landlord has a great deal of control over the CAMs, you can take some control over your tenancy by following these six tips.

1. Remember.... It's Rent PLUS CAM

Many tenants make the mistake of focusing on their rent when they first look for a space. Don't do this. You don't pay rent. You pay rent PLUS CAM. This means that your total occupancy cost is the sum of the two factors.

2. Know What You Control

Get a good understanding of what is billed directly to you and what is in your CAM charges. If you are a small portion of a building which includes water bills in CAM, for instance, installing low-flow faucets will save you relatively little money (although it's the right thing to do!). On the other hand, if electricity gets directly billed to you, high-efficiency lighting could be a great investment.

3. Get Your Budget

It's your landlord's responsibility to prepare an annual CAM budget in advance. This will help you plan for what your expenditures will be in the coming year, so make sure that you get a copy of it. In addition, when you are looking at a space, investigate historical CAM costs. That way, you can get a sense of the building's overall trend (probably upwards), and of the landlord's ability to accurately predict CAM charges.

4. Prepare to True-Up

At the end of the year, the landlord will send you a reconciliation for that year's CAMs. If the budgeted amount worked out to more than the actual CAM costs, you will receive a refund or rent credit. On the other hand, if the CAM collections don't cover the actual costs, you will be sent a bill for the difference. These bills can be sizable, so it's a good idea to have extra cash on hand, just in case.

5. Catch Flies With Honey...

While you might not have a lot of control over the overall operating expenses of the building, you are still the landlord's customer and they should want to keep you happy. They should also be reasonable stewards of the building's resources. Having a good relationship with them and making recommendations or respectful requests may help save money. For example, if you feel like your taxes are too high, you might want to have a friendly discussion with your landlord about a property tax appeal.

6. ...But Audit, Too

On the other hand, if you legitimately feel that you are being overcharged, your lease probably gives you the right to request a CAM audit. In the audit, a third party reviews the building's operating expenses to make sure that you are being billed correctly. If you are being overcharged, your landlord should give you a refund and potentially pay for the audit. Bear in mind that this strategy can backfire if you are underpaying, though.

As you review your CAMs, remember that you aren't alone. A good tenant representative isn't just there when you sign your lease. He or she can also help you during your tenancy to make sure that you're getting everything you should from your landlord and your space.