Commercial Real Estate Investment/CAM Reconcilliation

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Expert: - 3/25/2011


Question
Our property manager has not been providing annual CAM reconcilliations within 90 days of year-end as required by our lease.  In 2008 he presented us with a bill for 2006-2007 charges over 12 months late.  We agreed to pay it but have repeatedly asked for annual reconcilliations.

Today he presented a substantial bill for 2007 - 2010 charges (3 1/2 years due to a change in year-end), requesting payment within 10 days.

This seems to be an absurd way of doing business.  Is this unusual ?  Do we need to pay it ?

Answer
Susan:
Is this unusual?  Unfortunately no.  Do you need to pay it?  You will need to ask that question of an attorney in your area that specializes in Landlord/Tenant law.   In most areas of the country you will likely have to pay it, however, a judge will likely be very flexible about the timing and amount of how you pay the far overdue charges back to he landlord.   There are some jurisdictions however, that limit the amount, time, or both that a landlord has to back charge tenants for additional rent charges.  A legal specialist in this matter will know immediately how to advise you.  

You should also have someone that understands commercial property management review the charges being assessed for each year.  Sometimes a landlord will simply be irresponsible about making the efforts required to generate the CAM reconciliation assessments.   However, in some cases, a late assessment can be a sign of a property owner struggling with it's finances regarding the property and decides to use CAM charges to generate needed funds that far exceed the fair amount due to the landlord.

Finally, it might also be helpful to ask some of the other tenants in the same property if they are having the same problem and discuss how you might work together to mitigate the problems you are having with your landlord.

Send a follow-up question if I can assist you further with this matter.

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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