AboutJim Avancena Expertise I am best qualified to answer any questions that involve commercial leases, the complexities and inter-relationships of the myriad provisions that a lease may contain, and explain how they commonly effect a landlord or tenant in their day-to-day business operation. I can explain most matters that will come up during of the full lease cycle from standard industry practices regarding the lease acquistion process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of other problems that may come up during the lease term. I have practical experience with most property management issues and resolving landlord and tenant disputes. Note that I am not an attorney and cannot provide legal advice.
Experience Twenty-eight years active experience in the commercial real estate industry as a licensed real estate broker in the Washington DC Metro area(DC, Northern Virginia & Maryland). I have been admitted (approved) by the Maryland and DC courts to testify as an expert witness on the subjects of Commercial Leasing and Property Management in the area of standard industry practices. I have had a business for the last 14 years advising virtually every form of business entity from large national corporations to the smallest ma & pa new businesses regarding a wide range of commercial real estate matters in addition to property management and commercial leasing.
Organizations Currently my three children keep me so busy that it is difficult to find time to participate in organizations.
Publications I publish a local commercial real estate newsletter titled: "Tenants First". My firm was the subject of a high profile Washington Post business section cover page (2.25 page)feature story on January 13, 1993; "Overcharging Overhead".
Education/Credentials BA in Political Science from Memphis University, and five years of study in the real estate development summer program at MIT. I was certified as a commercial property manager (CPM-IREM), and currently hold a brokers license licensed in Maryland and the District of Columbia.
Awards and Honors Routine, the same plaques and honors that most others in my industry have earned, none that are significant.
Past/Present Clients Past clients include: The World Bank, George Washington University, National Association of Criminal Defense Attorneys, US Department of Commerce, The American Benefits Council, K-Mart Development, many law firms, a national union, other major organizations, and many, many small business firms and retail operators that I am most honored to serve. I estimate more than 1,500 firms/organizations.
Question We lease 3 separate suites in a small shopping center. We just received a bill for 2008 CAM charges on September 24, 2009. We asked for a breakdown of the charges and they include some questionable additions.
A charge for Landscaping and a charge for Landscape improvements. There is also a large charge for courtyard tile replacement.
Isn't landscape improvements and tile replacement capital expenditures and not CAM charges?
Answer Mr. Jenkins:
The answer to you question depends on the details of what was done in both instances and to a lesser extent on how much the cost was for each project.
For example, was the work done repair or maintenance type work where some of the tile was replaced or if a couple of bushes were diseased and they had to remove them from the existing landscaping. Or was the work more in the way of installing new landscaping where there was none before, which clearly would be "improvements". The same would be true for the tile; is it new tile in an area where there was none before, or did they completely replace the entire area of tile that was there before and this work was therefore "replacement" work.
If the nature of the work doesn't clarify this for you, the amount of the work could also help define the work as a capital cost if the cost was substantial. This is like defining when a hill becomes a mountain, however often you can easily classify the work at capital expense if it reaches a certain amount.
The other thing to do is to check your lease to be sure that nothing in the text about the CAM charges suggests the landlord could justify the inclusion of capital costs as a tenant reimbursable charge. Your landlord may consider a word in the CAM provision like "replacements" or "structural" as justification for expensing a capital cost as a CAM cost.
You might see if you can find where the actual "landscaping" work was done on site to see how extensive the scope of the work was that was done. The same might be helpful with the tile work if you can identify exactly where and what was done.
Capital costs are often an area of contention for lease reimbursement charges. If you have an accountant you might call him and define the work that was done in detail. Ask him if he thinks the work was a capital expense or repair. Most accountants have a large set of very thick black binders full of tax cases that come out annually and often you can find similar work involving landscaping or tile work and it will define the cost as capital or a repair. Your accountant will know what I am talking about.
Good work Mike, you are wise to check the CAM costs in detail. This may require you to get a actual copy of the supporting documents for each project from your landlord to help you make this determination. Some landlords are difficult about such a request.
Please send me a follow-up question if you can get more details on the scope of the work in each case, and/or let me know of any text in your CAM provision that you suspect may support your landlord's position. Let me know how this matter progresses, I hope I can assist you further.
