Operating Expenses & CAM Charges: The Hidden Costs That Can Bankrupt Tenants

For many commercial tenants, the rent figure in the lease isn’t the full story. Buried deeper are operating expense and common area maintenance (CAM) charges—fees that can swell far beyond what tenants expect. Left unchecked, they can turn an affordable lease into a financial trap.

What Are CAM Charges?

CAM charges are the costs landlords pass on to tenants for maintaining common areas and running the property. This can include landscaping, security, lighting, property management, insurance, and even capital improvements—depending on how the lease is drafted.

The Landlord Advantage

Many leases give landlords broad discretion to define and increase these charges. Tenants may find themselves paying for expenses that seem far removed from their business—like major renovations, excessive administrative fees, or legal costs tied to the property.

The Tenant’s Risk

Because CAM charges are often estimated at the beginning of the year and reconciled at the end, tenants can face large “true-up” bills they didn’t budget for. In some cases, unexpected CAM spikes have been enough to drive small businesses into insolvency.

Protecting Against CAM Surprises

• Define CAM Narrowly: Negotiate a clear, limited definition of allowable expenses.
• Cap Increases: Push for annual percentage caps on increases to keep costs predictable.
• Demand Transparency: Require landlords to provide detailed breakdowns and audit rights.
• Exclude Capital Costs: Make sure long-term improvements aren’t shifted onto tenants unfairly.

Bottom Line

Operating expenses and CAM charges aren’t minor details—they can make or break a lease. At JDE Law Firm, PLLC, I help tenants and landlords negotiate these terms with clarity so no one is blindsided by hidden costs.

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