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What are CAMs in a commercial lease agreement?

If you are new to Hawaii's commercial rental market, then you may not have ever negotiated a lease. When you rent an apartment, home or condominium, you may talk about price and such, but more than likely, you just signed a standard lease agreement for the amount of rent discussed between you and the landlord.

It doesn't quite work that way with a commercial lease. Under most circumstances, your prospective landlord will assume that you want to negotiate the terms of the lease. This is because the amount quoted to you for your base rent will not be the final amount you pay. Your landlord tacks on other costs to that amount to reach your total.

Common area maintenance charges

One of the most-often discussed parts of a commercial lease is the common area maintenance (CAM) fees you, as a tenant, will pay on top of your base rent. As the name implies, CAM fees cover the costs associated with keeping up the common areas of the structure in which you rent space. They often include the following:

  • Insurance
  • Routine maintenance
  • Repairs
  • Payment of the property's administrative staff, if applicable
  • Janitorial services, if applicable

The owner would bear these costs even if you were not a tenant, but since you are, you share in them. The primary questions are how much you share and what types of services your landlord is attempting to get you to pay. These items need close review to make sure that you will only pay your fair share and not your share plus more.

In addition, you need to determine whether you pay a flat rate or if your CAM fees will vary with each rental payment. It might even help to do some research by finding out what other tenants pay, if there are any. You also need to know what events could increase the amount of CAM fees that you pay and whether the property owner will cap them at a certain amount or percentage.

Negotiate your CAM fees

Considering all of the variables involved in these fees, you would probably fare better from a thorough review of this section of your prospective commercial lease. Negotiating could put you in a better position and make sure that your rights are respected. Moreover, you probably have a budget in mind for your new space, and you need all of the available information in order to make sure that you don't end up in a position where you pay too much in rent and your business falters as a result.

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Law Offices of Reuben S. F. Wong
1164 Bishop Street, Suite 1006
Honolulu, HI 96813

Toll Free: 888-567-4597
Phone: 808-531-3526
Fax: 808-531-3522
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