Managing a commercial property comes with its fair share of challenges. One of the most common issues that property owners often encounter is tenant disputes regarding Common Area Maintenance (CAM) expenses.
When you lease commercial space, it’s essential to have transparent lease terms that clearly outline common area maintenance charges and responsibilities. This blog post shares a step-by-step guide to resolving tenant CAM disputes. By following these steps, landlords can navigate these disagreements efficiently and maintain positive relationships with tenants.
What are CAM expenses?
CAM expenses are required to maintain and repair common areas that commercial tenants share in a property. CAM is crucial to both the landlord’s and tenant’s business success. However, disagreements between property owners and tenants over CAM expenses can often be complex and time-consuming to resolve. If a CAM dispute with a tenant arises, make sure to do the following.
Step 1: Review the Lease Agreement and CAM Clause
Begin by thoroughly reviewing the lease agreement and paying careful attention to the CAM clause. This clause outlines the tenant’s responsibilities regarding CAM expenses. By understanding the lease terms and conditions, you establish a solid foundation for addressing any disputes. Regular communication about any changes or updates to these charges can also help maintain clarity and trust between you and your tenants.
Step 2: Initiate Communication and Documentation
Open up clear and direct communication with the tenant concerning the CAM dispute. Request detailed information and supporting documents related to the issue in question. Properly document all discussions and interactions with the tenant to ensure a comprehensive record of the dispute.
Be sure to utilize STRATAFOLIO’s unlimited document and picture storage to keep copies of receipts and supporting documents.
Step 3: Analyze CAM Expenses
Perform a thorough analysis of the CAM expenses under scrutiny. Review financial records, invoices, receipts, pro-rata share calculations, and other relevant documentation. It is crucial to ascertain whether the expenses fall within the scope of CAM expenses as outlined in the lease agreement. Presenting these records to the tenant can help clarify any confusion and demonstrate transparency in your billing practices. STRATAFOLIO recommends consulting with an accountant or legal professional to ensure accuracy.
Step 4: Engage in Mediation
In cases where initial communication fails to resolve the dispute, consider engaging in negotiation or mediation with the tenant. An impartial third party can assist in reaching a mutually agreeable resolution between the property owner and the tenant. Mediation is often a cost-effective and efficient alternative to resolving disputes without resorting to formal legal proceedings.
Step 5: Seek Legal Advice
If mediation does not bring about a resolution, seeking legal advice may be necessary. Consult with an attorney experienced in commercial real estate and landlord-tenant disputes. Your commercial real estate attorney can guide you through the legal aspects and recommend the most appropriate action to recover unpaid CAM charges.
Step 6: Arbitration or Litigation
Should legal advice dictate, be prepared for the extensive resources, time, and stress involved in pursuing arbitration or litigation. If mediation proves ineffective, arbitration or litigation may be the only option to reach a binding legal resolution.
Conclusion
When disputing CAM charges, tenants could create considerable work and expense for commercial property owners. By following this step-by-step guide, landlords will gain the tools needed to efficiently and effectively handle these disputes. Remember to carefully review lease agreements, document all communication, conduct thorough analyses, and explore alternative dispute resolution methods before considering legal action. Through open communication, patience, and a willingness to find common ground, property owners can successfully navigate tenant CAM disputes while maintaining positive relationships with their tenants.
STRATAFOLIO can help you with your common area maintenance reconciliation, and ensure the correct amounts are being collected or refunded to your tenants. Contact us today for more information.
