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Common Area Maintenance (CAM) Clause
Practical Law Glossary Item 3-507-0227 (Approx. 3 pages)
Glossary
Common Area Maintenance (CAM) Clause
Typically found in a shopping center retail lease, this clause obligates the retail tenant to pay its proportionate share of the landlord's costs of operating and maintaining the common areas of the shopping center.
Landlords and tenants usually heavily negotiate the definition of CAM costs and what may be passed through by the landlord for the tenant to pay. The definition of CAM costs vary greatly from lease to lease. Generally, landlords want to define CAM as broadly as possible, while tenants strive to define CAM narrowly.
Since CAM costs can be significant, often tenants try to control their exposure by negotiating for one or more of the following:
- A monetary cap on the amount of CAM costs a landlord may pass through to the tenant in a particular lease year.
- The tenant's right to audit the landlord's records to verify the validity of the landlord's CAM charges.
- A negotiated fixed CAM charge that increases over the lease term in lieu of the tenant paying for its proportionate share of actual CAM costs.