Understanding The CAM (Common Area Maintenance) charge in a NNN lease
The CAM (Common Area Maintenance) charge in a NNN lease is calculated by adding up the costs associated with the maintenance and operation of the common areas of the property, such as landscaping, snow removal, cleaning, security, and repairs.
The calculation of CAM charges typically involves three steps:
Determine the total budget for common area maintenance expenses for the property for the upcoming year.
Divide the total budgeted expenses by the total square footage of the property to arrive at a per-square-foot cost for common area maintenance.
Multiply the per-square-foot cost by the square footage of the tenant’s leased space to arrive at the CAM charge for the tenant for the upcoming year.
In some cases, the lease agreement may also specify a cap on the CAM charges that the tenant will be responsible for, or may require the landlord to provide detailed documentation of the actual expenses incurred in order to justify the CAM charges.
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