We’ve written about common area maintenance in the past. And for good reason. Vague line items like “administrative fees” can be thousands of dollars, sometimes hundreds of thousands or more. That’s one reason you audit past CAM charges, especially where you’ve taken over a business. In other situations involving CAM, the property owner’s estimates are off – by huge margins – and the tenant is hit with a massive bill.
To make a long story short, for tenants in commercial spaces like shopping centers, CAM charges can be exorbitant. The specific amount of CAM often seems to depend on the property owner’s whim. You could characterize many of these cases as the property owner attempting to pass its costs on to the tenants.
Such was the case with a million-dollar remodel.
In that case, our client was a national chain tenant in a shopping center. The shopping center was sold to a new owner. The lease remained in place (with preexisting CAM charge terms and estimates).
Then the remodel – a full job, in which the entire shopping center had a makeover.
$1M in ‘CAM’ costs?
With the fancy remodel at hand, the property owner decided to pass the cost to its tenants. Our client was hit with a $1M bill – in the form of CAM charges. And these charges were far more than customary CAM. Our client’s refusal to pay the bill meant a lawsuit from the property owner, which we resolved at arbitration.
Did our client pay the full $1M?
Our client did in fact owe CAM charges, but not close to $1M. Ultimately, the property owner paid $300K in attorney fees – and probably wished it hadn’t tried to pass costs on in this way.