Tenant Not Required to Pay Broader CAM Charges

July 13, 2009
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FACTS: A lease required a shopping center tenant to pay a pro rata share of the costs of maintaining the center’s parking lot and capped the tenant’s share at 10 cents per square foot. The tenant later negotiated a lease addendum, which stated that the tenant would now pay CAM charges of 45 cents per square foot. The addendum also said that if the tenant decided to use its option to renew the lease, it would pay CAM charges at “the prevailing rate for the shopping center tenants,” but the annual increase could be no more than 15 percent a year. The addendum left the other terms of the existing lease intact.

After the tenant renewed its lease, a new owner of the center charged the tenant its share of all CAM charges, not just those related to the parking lot. The owner said that the phrase “the prevailing rate for the shopping center tenants” meant that tenant should pay a share of all CAM charges, just like other tenants. The tenant refused, claiming that the term “CAM charges” in the addendum referred only to the parking lot costs that the tenant had paid in the past. The owner sued to enforce its interpretation of the lease.

DECISION: An Ohio court ruled that the tenant had to pay only its pro rata share of the parking lot costs.

REASONING: The owner who had originally negotiated the lease and addendum testified that he did not intend to bill the tenant for any CAM charges unrelated to the parking lot. Several other previous owners and managers had also billed the tenant only for parking lot charges. Even the current owner had done so for a while.

n Upper Krust South v. School Employees Retirement Board of Ohio, March 1996