charge tenants late fee if they pay CAM recon late?

Question

Hi BP,

I manage a multi-tenants retails and tenants have been paying an estimated $7/sf/yr for NNN. So last year 2021 the previous PM did the CAM reconciliation for 2020 and the actually NNN was supposed to be $10. So he sent invoices to them for the $3 they still owe us. Well, he never followed up with them so by now we still have 2 tenants who don't pay yet. And 2021 CAM reconciliation is coming up. I now want to train them to always pay on time or there will be consequences to pay (and that I am a totally different from previous PM).

What do you guys think of this situation? I know these 2 tenants can totally pay. They just choose not to pay since previous PM never did anything to them. So I want to say and reinforce that if they pay late I will make them pay late fee from now on. Problem is, from reading the lease it says that CAM charges are treated as 'additional rent' so should be paid and treated same way as rent (that means there are penalty and interest charges for paying late, and it's due on the first day of each month) but it doesn't say anything about what we can do if tenants paid the deficiency CAM for the previous calendar year late. I don't want to say and do something that is not allowed (that is, to charge them late fee for paying deficiency CAM amount since the lease doesn't actually say it), or give empty threats (that is, to tell them that if they don't pay by an XX date then there will be a YY late fee but then will never reinforce it). Any of you guys out there have been dealing with this situation and how did you handle it?

Any input is greatly appreciated. Thanks!

Kathy Henley · Answer

@Courtney Duong Communicate the unpaid charge by sharing the Tenant's Statement. Mail it like a bill (after the face to face talk). When you post CAM Reconciliation 2020 on the tenant's account, they should see the charge as due and payable. When you post CAM Rec 2021, another line item will post, right after the current monthly rent charge.

Joel Owens · Answer

It might be worth your time to pay for a lease review by a commercial retail attorney local to the asset. That way instead of GUESSING when talking to tenants about your potential rights as a landlord as theirs as a tenant you actually have answers from an attorney that deals with these issues regularly in and out of court.

Some parts of your lease could be written poorly and be too vague to stand up for enforcement in a court of law. Every single word and how it is phrased in a lease MATTERS.

No legal advice given.

John M. · Answer

I manage some retail as well and I just tell them to read their lease and they usually don't have any kind of comeback for that.

Joe Splitrock · Answer

@Courtney Duong can you just meet with them and tell them and explain you need their cooperation paying on time? It is retail business, so they should understand that you need to get paid so you can pay your bills. Get their word and if they have not paid by the due date, call them and remind them that "they gave you their word this would not be an issue". It is amazing how just leveling with people can yield amazing results. I tell tenants straight up, "I don't want late fees, I just want rent paid on time".

charge tenants late fee if they pay CAM recon late?

7 Replies