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What are a Cam and How Does it Work?

Common Area Maintenance costs, or CAM as short, are probably one of the more common fees charged to tenants in a conventional triple net lease, usually paid by tenants in a conventional commercial property to the owner of such property. These CAM fees usually relate to common area maintenance within the property itself, but can also extend to common areas such as: communal areas, kitchens, laundry facilities, stairways and decking. CAM can be as little as a cent a month (or may be capped at a certain amount per quarter), and as much as several hundred pounds a year, monthly, annually or over the term of the lease. The amount of CAM, a tenant is asked to pay will depend on the length of their lease (often up to five years), the size of their property (the bigger the property, the more). As well as the value of the property itself, the longer the lease is the higher the tenant’s agreed annual spending on common area maintenance.

Landlords will usually set out the terms of their CAM on the leasing contract, including what is included in it. The most common element of CAM in leases is the ‘common area’ element. This will usually mean that the tenant is responsible for cleaning and maintaining common areas in the property such as: hallways, bathrooms, stairs and outside guttering. In some cases, such as with large buildings, it may also include a swimming pool area. In any case, such areas must be kept clean at all times, with no exceptions.

One aspect of common area maintenance is the payment required by the tenant, which will be based on an agreed schedule of events. The amount of payment used will depend on how much the property is worth, the length of the lease and the interest rate applicable. If a property has a high yearly spending of say twenty thousand pounds then the owner may decide to increase the yearly payment by a further twenty percent, perhaps in return for the tenant committing to increase their ‘common area’ maintenance. Of course, the amount of this payment will depend on the property value.

There are several other ways that a CAM can be specified on a lease. It can be done in detail or in terms of a set amount of work to be carried out each year, month or day. In effect, the CAM is the deal breaker, deciding whether a tenant will pay their monthly payment or not. It is important that before setting out any details of a CAM that both parties are happy with them. In most cases, a tenant who is under the influence of drugs or alcohol may be unable to agree a CAM; they may want more frequent visits to the swimming pool or want the responsibility for deciding how and who comes into the common areas to be shared.

Renting costs are one of those things that are completely agreed by both parties at the time the lease is agreed for. So long as the lease is for a fixed length of time and agreed to be for a certain number of years, the agreed rental payment will remain the same throughout the term. This payment will also be based on the property market value at the time, so any fluctuations in price will not affect the rental. However, it is usual for a tenant to pay more when a property increases in value during the term of the lease.

Landlords and tenants should agree how much towards a CAM each party will be expected to pay. It may be one lump sum up front, a flat monthly fee or a percentage of the rental. In some cases, a CAM might be included in the monthly rent, but it is usually a separate charge. It may also be an additional charge for damages to the premises. Any agreement should set out the responsibilities of both parties in case something goes wrong.

Most leases will also detail the responsibilities of either the landlord or the tenant regarding the cleanliness and maintenance of the property. This is usually the responsibility of the property owner, unless it is specifically stated in the lease that it is the tenant’s responsibility. If this is the case, then the property owner should ensure that the tenant cleans and maintains the property in a way that meets accepted standards. It is also expected that all fixtures and fittings on the property are in good condition and that they are up to code.

The terms and conditions for a cam are detailed in the lease and can vary slightly between different properties. They should be drafted carefully to ensure that both the property owner and the tenant receive what they are entitled too. They are also written in a way that makes them easy to understand and comply with. If you are looking for a property to lease, consider hiring a camper to help you view potential properties so that you can agree on the terms and conditions easily.

What are a Cam and How Does it Work?
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