In commercial real estate agreements, a CAM letter, or Common Area Maintenance letter, is a document that lists the expenses expended by a landlord to maintain a property’s shared areas, such as corridors, lobbies, parking lots, and landscaping. This letter informs tenants of the amount of these fees, which are typically added to their base rent. The CAM letter will often include a comparison of predicted and actual CAM expenses, which could indicate whether the tenant receives a refund or must pay extra.
Here’s a more detailed explanation:
What it is:
A CAM letter is a letter from the landlord to the tenants that lists the costs of keeping the property’s common spaces clean and safe.
Why a CAM letter is important:
It makes sure that everyone knows how shared costs are split up, and it helps tenants realise what else they are paying for outside their rent.
What to include in CAM letter:
A CAM letter usually lists the costs for things like landscaping, cleaning, repairs, and utilities for shared spaces.
CAM Reconciliation:
The letter sometimes contains a reconciliation, which compares the expected CAM charges paid over the course of the year with the actual costs. This could result tenant owing more money or receiving a refund.
Purpose of the CAM letter:
It enables renters to analyse and potentially challenge costs, while landlords may keep accurate records for financial reporting and property management.
A well-crafted CAM (Common Area Maintenance) letter is essential because it sets the tone for transparency and professionalism in your relationship with tenants. The CAM Reconciliation informs tenants of their share of the operating expenses, and a clear, detailed letter helps avoid confusion or disputes. By sending a thorough and accurate CAM letter, you show tenants that you’re organized and attentive to detail, which builds trust. Moreover, a well-communicated reconciliation ensures that tenants understand the costs and reinforces the value of the services provided. It’s a key step in maintaining positive tenant relations and ensuring timely payments.
Remember to always verify your lease agreement or consult with your attorney before using any templates or letters.
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