Common Area Maintenance or CAM is a fee assessed to tenants in commercial properties, which covers the cost of maintaining all the common areas that the tenants share. Common areas may include:
It typically also includes janitorial services, snow removal, landscaping, pest control, fire and life safety systems, security systems and more.
CAM charges are typically a fixed amount or based on the tenant’s pro-rata share of the property. Moreover, CAM costs are usually in addition to the base rent, so property owners can increase their revenue without raising the rental rates.
The process of CAM reconciliation trues up the actual CAM expenses with what the tenant has paid. Based on the actual CAM calculations, the tenant will either owe the landlord money if they’ve underpaid, or the landlord will owe the tenant money if they overpaid.
The owner will estimate the yearly CAM charges per tenant and typically charge a CAM fee each month along with rent. When it comes time to reconcile, which is usually at the beginning of each year, the reconciliation process will true up the actual CAM expenses against what the tenant has paid.
CAM is also typically charged on a pro-rata share basis so that each tenant pays their share of the property’s expenses based on the amount of space they occupy.
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