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Common area maintenance (CAM) is an additional amount of money that property occupants are required to pay to cover the expense of maintaining shared facilities. The fee is assessed by the property manager and typically divides the common area expenses in proportion to the percentage of square footage the occupant controls out of the total space available for occupancy. CAM is ordinarily an issue in commercial leases and with residential cooperatives and condominiums.
Areas in common are those parts of a property that are used by all occupants or are provided for use by the public. In a shopping center, for instance, the common areas would include the public bathrooms and the promenade. A condominium complex might have common areas that include a swimming pool and a golf course. The theory behind passing the expenses for the maintenance of these areas to the occupants is a shared responsibility for the property features that add value to the occupant's property interest.
Assessments of common area maintenance fees are handled by the landlord or property manager. A residential property will typically require occupants to pay a monthly flat CAM fee. The amount of CAM that any one occupant pays would be proportional to the square footage of his apartment. Occupants of larger apartments will have to pay a higher monthly CAM. This flat fee would be adjusted upwards periodically to keep it in line with increases in expenses.
Commercial properties, such as office buildings and shopping centers, typically assess common area maintenance fees based on actual expenses as time goes on. Tenants would pay a variable amount for CAM, depending upon the computations done by management for a particular time period. Due to this variability, CAM is one of the most important parts of a commercial lease. The responsibility to pay this additional assessment on top of the rent can make or break a business.
Properties that include common area maintenance fees assess the charge on everyone. All occupants are contractually required to pay. As a result, knowing what expenses are included in the CAM computation for commercial properties and how frequently CAM is increased in residential properties is essential. The main drawback of this type of expense is that the business or apartment owner has no control over the process. Property managers decide the if, when, and how of the expense, and the owner has no choice but to pay.
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