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Zachary
Zachary, Attorney
Category: Legal
Satisfied Customers: 3814
Experience:  Lead trial/International commercial attorney licensed 11 yrs
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I am considering closing my business. I rent a commercial space

Resolved Question:

I am considering closing my business. I rent a commercial space for this business. Included in my lease are CAM fees. If I move out, am I responsible for the rent only, or CAM fees too?
Submitted: 1 year ago.
Category: Legal
Expert:  Zachary replied 1 year ago.
This depends entirely on what your commercial lease says in its termination clause. If you have a copy of your lease available, you need to look at the section talking about termination. You also need to look at the part talking about CAM fees. Most commercial leases have a clause which states that CAM fees will be deemed as part of the overall rent. Therefore, it is likely that you will be liable for the CAM fees in addition to the rent if you terminate the lease early, unless there is a provision in the lease which defines your specific liability for early termination otherwise.

If this doesn't answer your question, please take a look at the lease for the provisions I've cited and let me know what it says. Unfortunately , we have no way of looking a document through this forum and I am not permitted to provide you with any personal contact information. The only way I can look at the language is if you type it in for me to see. I know this is a pain, but if you want me to interpret the language, that is the only way I can do it for you. I hope this doesn't inconvenience you too much and I want you to know that I will do all I can through this forum to help you. Please let me know if you need more information.
Customer: replied 1 year ago.
Unfortunately, I'm at home and my lease is at in my office at my business. Is there any way to contact you tommorrow without re-paying your $40 fee?
Expert:  Zachary replied 1 year ago.
Absolutely. I will leave the question open and look for your response tomorrow. Just respond to this when you are ready with the lease.
Customer: replied 1 year ago.

Ok Zach, I have my lease in front of me. Clause #16 is titled "Effect of Default" In the event of any default or breach, in addtion to any other right or remedy available to landloed, either at law or in equity, landlord may exert any or one or more of the following rights: 1) Landlord may re-enter the premisis immediately and remove property an personnel of tenant etc... 2) Landlord may retake the premises and may terminate this lease by giving written notice of termination to tenant. Without such notice, landlords retaking will not terminate the lease. On termination, landlord may recover from tenant all damages proximately resulting from the breach, including the cost of recovering the premises and the difference between the rent due for the balance if the lease term as though the lease had not been terminated and the fair market value of the premises for the balance of the lease term as though the lease had not been terminated wich sum shall be immediately due to the landlord from the tenant. 3) Landlord may re-let the premises or any part thereof for any term without terminating this lease, at such rent and on such terms as it may choose. Landlord may make alterations and repairs to the premises. In addition to tenant's liability to landlord for breach of this lease, tenant shall be liable for all expenses of re-letting, for any alterations and repairs made, and for the rent due for the balance of the lease term, which sum shall be immediately due landlord from tenant. The amount due landlord will be reduced by the net rent recieved by landlord during the remaining term of this lease from re-letting the premises or any part thereof. If during the remaining term of this lease landlord receives more than the amount due the landlord under this sub-paragraph, the landlord shall pay the tenant, bu tonly to the extent tenant has actually made payment pursuant to this sub-paragraph.


There is no section titled "termination". The section i have just written is the closest thing to it. It does talk about "rent" being paid to landlord, but nothing about CAM fees. Is it just "assumed". If I vacate, but can still pay rent until they re-let or the end of the term, I am not using the common areas to be maintenanced. Correct?

Customer: replied 1 year ago.
Relist: Answer quality.
Zachery needed to know exact verbage from my lease after reading my original question. I have now sent the verbage and would like a response.
Expert:  Zachary replied 1 year ago.
Thank you for getting back to me. The way this is written would allow the acceleration of rent to include CAM fees. The simple fact that you are not there and are not using the common area has nothing to do with it, as acceleration is a contractual remedial provision to protect the landlord when you breach the lease, and to discourage you from breaching the lease.

I need you to look into the section which talks about the CAM fees and see if there is any language that states that the CAM fees will be part of the rent, or a section that reads as follows:

Section 4(D), entitled “Additional Rent”, shall be amended as follows:
“In addition to the base monthly rent and prorated rent, Tenant will pay Landlord all other monthly amounts due under this lease including, but not limited to, CAM fees, charges for previous Late Fees, Returned Check Fees, Insurance and Taxes. All amounts payable under this paragraph are deemed to be “rent” for the purposes of this lease. Failure to pay all amounts due as rent shall be deemed a material breach of the Lease Agreement and Landlord may pursue all remedies available to him pursuant to Section 20(C) of the Lease Agreement.”


This is an example from the commercial lease form I use for my clients, which would arguably cause the CAM fees to be accelerated.

The courts in some states have ruled that even these clauses do not accelerate CAM fees along with rent. However, there is no such case law in Nebraska, so the courts have not settled the question.

In the end, the general practice in the industry is to not accelerate CAM fees and courts in most states say that they are not to be counted as "rent" for acceleration purposes. Again though, if the above "additional rent" language is in the contract the landlord might try to argue that the CAM fees can be accelerated as well.


Customer: replied 1 year ago.

The section in the lease about CAM fees is as follows:


Operating Expenses. In addition to the Base Rent, tenant shall pay a pro rate share of operating expenses of the real estate of which the premises are part, parking areas, and grounds ("Real Estate"). "Operating expenses" shall mean all costs of maintaing and operating the Real Estate, including but not limited to all taxes and special assessments levied upon the Real Estate, fixtures, and personal property used by ladlord at the Real Estate, all insurance costs, all costs of labor, material and supplies for maintenance, repair, replacement, and operation of the Real Estate, including, biut not limited to line painting, lighting, snow removal, landscaping, cleaning, depreciation of machinery and equipment used in such maintenance, repair and management costs, including Real Estate superintendents. Operating Expenses shall not include property additions and capital improvements to the real estate, alterations made for specific tenants, depreciation of the real estate, debt service on long term debt or income taxes paid by landlord.


Tenants pro rata share of the operating expenses shall be determined on an annual basis for each calendar year ending..... If tenant's payments of estimated operating expenses exceed the amount due landlord for that calendar year, landlord shall, at its option, provided tenant is not then in default under this lease, apply the excess as a credit against tenant's other obligation under this lease or promptly refund such excess to tenant if the term of this lease has already expired, in either case without interest to tenant.


Sooo...what do you think? It appears to me that CAM fees are not considered rent, as they refer to them seperate from "Base Rent" as per their verbage. Am I beating a dead horse?

Expert:  Zachary replied 1 year ago.
No, I think you are right. I think if it doesn't have the "additional rent" language, and based on my reading of the language you've stated above, it would not be legal to include the CAM fees as "rent" that is subject to acceleration.

Now, just because it shouldn't happen doesn't mean the landlord won't try it. Be vigilant during this process and hold your ground that CAM fees are not rent that can be accelerated.

GOOD LUCK,
ZDN
Zachary, Attorney
Category: Legal
Satisfied Customers: 3814
Experience: Lead trial/International commercial attorney licensed 11 yrs
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