Common Area Maintenance (CAM) fee recovery from leases can create accounting challenges, causing tenants to lose time and resources during annual reconciliation. Sometimes the recovery can also include TI CAM (Taxes, Insurance, and Common Area Maintenance).
Calculation
Accurate CAM cost calculation relies on collecting relevant invoices and charges that fall under common area maintenance. Your property manager will keep track of all relevant maintenance costs that need to be added to CAM calculations for reconciliation.
Legacy Tools are Error Prone
Property managers use outdated and manual approaches for CAM reconciliation after receiving year-end costs. Many managers still use only Excel to manually track CAM recoveries, despite labor requirements and risk of human error. Property managers can overlook items or miss errors in manual CAM calculations, potentially undercharging or overcharging tenants.
When property managers compile their reports, they often miscalculate tenant responsibility and charge tenants too much for CAM, taxes, or insurance. Property managers might also accidentally charge you the incorrect pro rata share or percentage. Using disparate, non-integrated tools such as Excel in combination with dated accounting software multiplies these risks.
Your landlord should give you an itemized report of your expenses, taxes, and insurance to prove you are receiving the correct charges.
Before moving in, you should ask your property manager about:
- End costs and expenses for previous periods
- What solution they use to calculate their CAM cost
- How they itemize their CAM reconciliation
- The deadlines listed in the lease
- Your pro rata share and admin fees
