If you have a commercial lease you are aware of common area maintenance or (CAM) expenses. This is essentially a tenant’s pro-rata share of operating expenses that the landlord incurs over the lease term in maintaining and operating the retail center or the building. CAM costs are an important part of commercial lease that allow landlords to ensure well-maintained property that, in essence benefits every tenant occupying it.
But CAM expenses are dynamic and complex in nature and tenants rely on landlords when it comes to CAM calculations. While CAM expenses are paid in good faith, as tenant and business owner you should have a visibility into these charges. This is only to ensure that these calculations are accurate and that you are paying what is owed as per the lease terms and fair.
Why should you consider CAM audit?
Whether you are worried about landlord’s practices in the way CAM costs are estimated or want to simply ensure there are no errors that have resulted in inaccurate expense calculation, CAM audit is your solution. A thorough audit can help not just alleviate the risk of inaccurate computation but also put speculations to rest. In fact, CAM audit is a practice that can benefit all parties involved.
A CAM audit allows tenants to reassess the estimates, and how charges were computed as per their share of the CAM expense. It not only helps uncover inaccuracies and inefficient practices but also weed out human errors and miscalculations, ensuring the charges are accurate and as per the lease terms. It also brings in transparency between tenants and landlord, simplifying the process refunds in case of overcharges.
As business owners your objective is to improve bottom line and optimize cost. CAM costs make up for a huge part in a commercial lease. And if you do not have complete visibility or do not understand these costs and hidden charges you may end up paying more than your share, thus adding to your business expense. Therefore, it is important that you pay close attention to these expenses and ensure they are accurate. CAM audit can help you save money and shield you from the risk of overpaying.
Who should you outsource CAM audit to?
Most of the commercial lease today include explicit audit rights provided to tenants, but even if it does not, tenants have the right to verify CAM charges. But CAM audits require certified professional who understand commercial leases and associated accounting practices. Since CAM audit entails complex and tedious set of tasks and close scrutiny of invoices and lease contracts it is recommended that you outsource CAM audit to certified third party experts – who can efficiently assess and check the accuracy of CAM charges.
A specialized service provider can help conduct a comprehensive review of CAM charges – identify hidden or erroneous expenses, determine fair pricing, and ensure the invoice is in line with lease terms. Given the industry experience, domain knowledge and best practices specialized third party consultant bring a distinct advantage. They not only help confirm whether charges are accurate and fair but prevent unauthorized expenses/overcharges in future billing, resulting in significant cost saving for tenants.