Four Tips for Controlling Operating Expenses

February 12, 2009
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Operating expenses are often a source of frustration for tenants. In many instances, owners manipulate the operating expenses provision (also known as Common Area Maintenance or CAM) and reap profits from hidden loopholes. Before you sign your lease, be sure to do the following:

--Carefully review past CAM charges for the building. If possible, try to go back at least three years.

--Beware of provisions in the lease that make the owner’s CAM charge determination final. Reserve the right to audit the owner’s expenses and review its calculations.

--Check the CAM clause against the repair and maintenance and property tax clauses (and others if applicable) in the lease to ensure that the owner does not attempt to pass through any expenses incurred under those clauses.

--If possible, get the owner to “cap” the CAM charges or, at a minimum, add a “kick out” clause that allows you to terminate the lease if the CAM charges exceed a certain amount.