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Common area expenses (CAM) are part of virtually every office and retail lease. These expenses cover everything from parking lots and reception areas to common meeting spaces and restrooms.
In triple net leases, landlords seek to recover these expenses from tenants. This can be a significant component of a tenant's lease expense.
The scope of CAM, caps or other limitations, and audit rights are highly negotiated. Landlords and lenders are often reluctant to give any concessions.
This program provides a practical guide to negotiating and drafting CAM provisions in commercial leases.
- Scope of common area maintenance (CAM) expenses
- Relationship to minimum maintenance standards
- Treatment of taxes and insurance
- Differentiating operating v. capital expenses in CAM recovery
- Caps on CAM, fixed CAM, gross-up considerations
- Audit and information rights for CAM
- Understanding landlord, lender, and tenant motivations and concerns