The title of this post is a cheeky reference to acclaimed fiction writer Raymond Carver, who died in 1988, and his 1981 short story collection What We Talk About When We Talk About Love. Many of Carver’s stories are populated with “regular” characters facing workaday circumstances, like the fraught relationship between a husband and wife.
Commercial tenants sometimes face fraught relationships with property owners over common area maintenance, a term that sounds about as workaday as it gets, but can mean hundreds of thousands or even millions of dollars in unexpected costs.
Landlords have quite a bit of “wiggle room” when it comes to common area maintenance (“CAM”), and the amount of additional rent they charge their tenants for it. As you know, CAM is generally based on the amount of rented square footage, and goes toward maintenance of common areas (sidewalks, parking lots, food courts, etc.).
In a sense, CAM is akin to monthly maintenance fees charged to condominium owners – with a distinction: CAM charges can fluctuate wildly, based on the landlord’s estimates and reconciliation.
While results are never guaranteed, in both of the examples below, there is legal recourse.
Example No. 1: Troubling Estimate
We represent a nationwide chain store that had moved into a shopping center. The trouble comes when the landlord’s estimates of our client’s share of CAM expenses are off by more than a million dollars, so that our client’s costs are more than double, from taxes and insurance to street sweeping and so on.
We assist our client in suing for fraud, recession based on mutual mistake, mistake of fact, breach of lease, and breach of implied covenant of good faith and fair dealing. To make a long story short, we ultimately obtain a valid complaint (after the case bounces around from the trial to appellate court and back again).
With a valid complaint in hand, the landlord settles.
Example No. 2: Troubling Reconciliation
Even if the landlord hasn’t pulled a fast one, as in the first example above, a lot can happen between the estimate and the reconciliation.
In this example, the tenant pays CAM charges for a year based on the original estimate, but at the end of the year, the landlord informs our client that the estimate was off, and now intends to make the tenant pay what they owed from the prior year and what the landlord estimates for next year.
If the estimate was off by a large margin, there’s a double hit to the tenant.
Is this fair? Probably not, but it happens, and the issue often needs to be litigated.