Commercial Real Estate Investment/CAM and NNN charges

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Expert: - 4/2/2010


Question
Our NNN and CAM has double in less than two years. Everyone (tenants) in the shopping center trying to contact the landlord regarding the CAM, but the landlord and the property management company  did not response to any call or even picking up the phone. There is nothing in the lease that limiting our right to audit the CAM. We all have separately sent certified letters to Property management company but still no response.


Is there a way for us to force them to response or to give the documents needed for auditing the CAM?

We are thinking collectively hiring a lawyer to write a letter on our behalf. It will force the landlord to response?

Answer
Eric:

Your questions require a much more complicated answer than you imagine.

Meeting with an attorney that is primarily experienced in Landlord/Tenant law ("L & T") to advise you would be best at this point - do not turn this into a group tenant matter yet.  Once you find such a specialist, schedule an appointment with him/her to review your lease and the landlord's billing documents, then discuss your legal situation and have the attorney advise you accordingly.

The attorney will probably give you a range of what the legal expenses could be if he handles just your portion of the dispute and the same information on cost if you turn this into a group action.  A group action is both extremely difficult to control and can be a nightmare to administer.  Often the legal expense allocation among tenants gets splintered and chaos develops.   

The expense to have just an initial review and advisory meeting with a L&T attorney would likely be cost effective given the circumstances you describe.  I do not suggest you attempt to "wing-it" on your own.  Landlords are often extremely skilled at using what you don't know against you in this situation.  Excluding the additional valuable information provided by an attorney in this regard, I could write you a set of books regarding how your situation can play out.  Like disarming explosives, one wrong move in this process and your exposure and costs could explode.  Talk with an attorney.  

Good luck,

-Jim  

Commercial Real Estate Investment

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Jim Avancena, CPM

Expertise

Best qualified to answer questions that involve commercial leases, that is, basic issues as well as the often unexpected effects of the complexities and inter-relationships of the provisions a lease may contain, explain how seemingly innocuous text in your lease can have a major impact on a Tenant or Landlord and their business operations, and the common practices utilized in the industry. I can untangle most matters that may come up from the time a tenant begins searching for a office or store space and the lease acquisition process, concerns related to remodeling/improving the leased premises, moving-in, subletting or assigning the leased space, and a long list of problems that may come up during the lease term and even after a tenant moves out. I have practical experience with most property management issues and resolving landlord and tenant disputes - especially those involving what may appear to be overcharges assessed for additional lease charges like CAM costs, operating expense reimbursement, real estate taxes, utilities, construction improvements etc. Note that I am not an attorney and cannot provide legal advice.

Experience

Thirty 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 participate in organizations with continuing and specific time requirements.

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 full pages) feature story on January 13, 1993; titled "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 in Maryland and the District of Columbia.

Awards and Honors
The same plaques and honors that most others in my industry have earned. I have none that I consider especially meaningful.

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.

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