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Thomas McJD
Thomas McJD, Lawyer
Category: Landlord-Tenant
Satisfied Customers: 46
Experience:  Landlord-Tenant Law Expert
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Commercial CAM issue. I signed a new lease in April 2015,

Customer Question

Commercial CAM issue. I signed a new lease in April 2015, and the CAM on the contract is $700 per month (represent 6% of my portion in the total SQF the building). In Feb-2016 the property manager sent me a letter asking for $1050 per month, and his explanation is that they had already spent much more than the estimate CAM back in 2014.
I understand that when CAM increased, I also responsible to pay more. However, I think it's ethically and lawfully wrong for the manager to not give me a true estimate of the CAM when I sign the lease in April 2015 because they had already spent much more in 2014. When I explain this to the manager, he said that they did not reconcile 2014 until June 2015 hence he can't give me a better estimate of the CAM. He's insisting that 2015 CAM does not change, and that the increase in only the reflection of change in 2014 before I signed the lease.
Can I lawfully demand the CAM to stay the same at $700, and only pay CAM increase for any new expense differences from the date I signed the lease (April 2015) going forward? If not, what can I do to to minimize almost 50% increase of CAM in just one year which is what the manager asking for?
Submitted: 7 months ago.
Category: Landlord-Tenant
Expert:  Loren replied 7 months ago.
Good day. I am Loren, a licensed attorney, and I look forward to assisting you.
Expert:  Loren replied 7 months ago.
Does the lease provide for when the annual reconciliation takes place? Typically, it is within the first 30 days of the year?Does the lease provide the tenant with the right to examine the landlord's books for the actual CAM expenses?
Customer: replied 7 months ago.
Yes, the lease provide the tenant with the right to examine the landlord's books for the actual CAM expenses.
Expert:  Loren replied 7 months ago.
What about a provision for when your CAM can reconciled and estimated payments adjusted?
Customer: replied 7 months ago.
Regarding: Does the lease provide for when the annual reconciliation takes place? Typically, it is within the first 30 days of the year? I need to review the lease and get back with you, but I don't recall seeing this in the lease.
Expert:  Loren replied 7 months ago.
ok. Look for a section covering the payment of CAM. It should provide for when the estimated CAM payment can be reconciled revised.
Customer: replied 7 months ago.
Lessee’s Share of Common Area Operating Expenses is payable monthly on the same day as the Base Rent is due
hereunder. The amount of such payments shall be based on Lessor's estimate of the annual Common Area Operating Expenses. Within 60 days after
written request (but not more than once each year) Lessor shall deliver to Lessee a reasonably detailed statement showing Lessee's Share of the
actual Common Area Operating Expenses for the preceding year. If Lessee's payments during such year exceed Lessee's Share, Lessor shall credit
the amount of such over-payment against Lessee's future payments. If Lessee's payments during such year were less than Lessee's Share, Lessee
shall pay to Lessor the amount of the deficiency within 10 days after delivery by Lessor to Lessee of the statement.
Customer: replied 7 months ago.
I signed the new lease in April 2015, and as of today, I never receive any "reasonably detailed statement showing Lessee's Share of the actual Common Area Operating Expenses for the preceding year."The manager just sent the letter asking for the increase of CAM.
Expert:  Loren replied 7 months ago.
So this is the first time your CAM has been reconciled?
Expert:  Loren replied 7 months ago.
The provision you cited does not provide for a regularly scheduled method of reconciling the actual expenses and setting the estimated monthly payment amount for the coming year. Is there such a provision in your lease? There should be a scheduled process at the beginning of the year.
Customer: replied 7 months ago.
I want to summary the situation so you can understand. I bought a new store on April 2015, I signed a lease with $740 CAM. This month (April 2016), landlord just sent me a letter told me that I paid wrong amount. I should be $1040. I own him $300X12 =$3600 for last year CAM. From this April, I must pay him $1040 CAM for each month.
Customer: replied 7 months ago.
You are correct, let me find the place where we can find a regularly scheduled method of reconciling the actual expenses and setting the estimated monthly payment amount for the coming year.
Expert:  Loren replied 7 months ago.
If the lease provided for $740 CAM as an estimated amount to be reconciled, then that is all you can be required to pay until actual expenses are calculated and reconciled against the estimated payments you made. So, the original amount is not wrong it is just an estimate which will be reconciled, usually, on an annual basis.
Customer: replied 7 months ago.
But the estimate should not be 50% below the actual.
Customer: replied 7 months ago.
I can't find the statement about regularly scheduled method of reconciling. Are you saying that if we don't see this statement, then the manager can do anything? for example 50% actual over the estimate?
Expert:  Loren replied 7 months ago.
Even if it were accidentally calculated too low, it is just made up in the next scheduled reconciliation. It is not illegal, but if the landlord made a mistake then they should work with you to straighten it out. Either way, though, the CAM expenses are owed based on the actual numbers. If you underpay then you will just owe more later. It is not really damages to you since you owe actual expenses.
Customer: replied 7 months ago.
It damages to me because I made a wrong choice for my business decision. When buying a business, the lease base/CAM affect the price of how much I will offer to take over, and it's possible that I don't even offer anything due to the RENT/CAM is too high.
Expert:  Loren replied 7 months ago.
If you bought this from the prior tenant and they certified the expenses as accurate then you may have a claim against the seller of the business for fraud.If the lease does not contain any limitations on how much cam can change from year to year then you will just have to negotiate a settlement with the landlord.

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