Understanding Common Area Maintenance (CAM) Charges and Expenses

Common Area Maintenance (CAM) is a term commonly used in the real estate industry to refer to the expenses associated with the maintenance and upkeep of shared or common areas in commercial properties. These areas are typically used and enjoyed by multiple tenants or occupants within a building or complex.

Calculation of Common Area Maintenance Charges

The calculation of CAM charges can vary depending on the specific lease agreement between the landlord and the tenant. In most cases, CAM charges are calculated based on the proportionate share of each tenant’s rented space in relation to the total rentable area of the property.

To determine the CAM charges, the landlord typically estimates the annual expenses for maintaining the common areas and divides this amount among the tenants based on their proportionate share. This share is usually expressed as a percentage or a fraction.

For example, if a tenant occupies 20% of the total rentable area, they would be responsible for paying 20% of the total CAM charges for the property.

Inclusions in Common Area Maintenance

Common area maintenance charges typically cover a wide range of expenses related to the upkeep and operation of shared spaces. These expenses can include:

  • Landscaping and outdoor maintenance
  • Janitorial services for common areas
  • Security systems and personnel
  • Maintenance and repair of common areas such as hallways, elevators, and parking lots
  • Utilities for common areas, including electricity, water, and gas
  • Trash removal and waste management
  • Insurance for common areas
  • Property management fees

Examples of Common Area Maintenance

Common area maintenance expenses can vary depending on the type of property and its specific amenities. Here are a few examples of common area maintenance:

  1. Landscaping: The cost of maintaining lawns, gardens, and other outdoor areas.
  2. Janitorial Services: Cleaning and maintenance of shared restrooms, lobbies, and other common areas.
  3. Parking Lot Maintenance: Repairing potholes, repainting lines, and ensuring proper lighting and signage.
  4. Common Area Utilities: Electricity, water, and gas used in hallways, elevators, and other shared spaces.
  5. Security: Installation and monitoring of security systems, as well as the employment of security personnel.
  6. Trash Removal: Regular collection and disposal of waste from common areas.
  7. Property Management: Fees associated with the management and administration of the property.

It is important for both landlords and tenants to clearly define the scope of common area maintenance in the lease agreement to avoid any misunderstandings or disputes. This includes specifying which expenses are included in the CAM charges and any limitations or exclusions that may apply.

Understanding common area maintenance charges and expenses is essential for both landlords and tenants in commercial real estate. By clearly outlining the responsibilities and costs associated with maintaining shared spaces, both parties can ensure a fair and well-maintained property.