Property Management Fees Included in CAM Charge

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Property Management Fees Included in CAM Charge

Karisa M.
Property Manager · San Diego, CA · Member since 2018 · 7 posts · 1 vote

Commercial property management company charges 5% of monthly gross income as its fee, which includes CAM income. The tenant's lease is NNN and property management fees are considered a CAM charge. If the tenant is paying a monthly CAM fee (which includes property management fees) and the property management company is charging 5% of gross income (which includes CAM), is the tenant being double charged? Even if so, is this standard?

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  • Jon Allen
    Investor · Charlotte, NC · Member since 2018 · 14 posts · 4 votes
    7y

    Hi Karisa. The tenant is not getting double-charged. The CAM income you are referring to is additional rent paid by the tenant towards the expected total CAM for the year. The property management company should be preparing a reconciliation at year end showing the total payments Landlord received from the tenant vs the property's actual CAM (plus taxes and insurance) and the delta will be either refunded or invoiced to the tenant.

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  • Jon Allen
    Investor · Charlotte, NC · Member since 2018 · 14 posts · 4 votes
    7y

    To answer the latter part of the question, yes that arrangement is pretty standard. Alternatively, the tenant could simply make minimum rent payments throughout the year, and when the CAM reconciliation is performed, the tenant would be billed for the entire amounts, since they had not made any of these payments during the year.

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  • Ronald RohdePro Member
    Attorney · Dallas, TX · Member since 2016 · 5k+ posts · 2k+ votes
    7y

    This is a pretty easy question for your lawyer, who reviewed the lease for you?

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    6y

    When reviewing a property management agreement for a retail center a KEY piece is management fees are paid off of CAM - WHEN IT IS COLLECTED.

    Some management companies charge off of expected CAM charges that tenants might have arrears on. They take the fee anyways for management and try to get from tenants later.

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