Getting tenants to accept CAM charges.

Early in my property management career, I had a co-worker who was almost always able to turn the sourest lemons into lemonade. One day, I asked her the secret to solving problems. I was amazed that to my seemingly complex question, she gave a very simple answer. "I don't solve problems; I avoid them," was her reply.

While many would argue that problem solving and problem avoiding are one in the same, from a property manager's viewpoint, they are entirely different concepts.

Property managers are often viewed as problem solvers. We are the ones that everyone calls when things go wrong. However, I have found that the greatest single asset a property manager can possess is the foresight to avoid problems. Obviously, the second greatest asset is the ability to solve those problems that you cannot avoid.

Nowhere are the concepts of problem solving and problem avoiding more important than in working with tenants to collect common area maintenance (CAM) charges.

In the old days, CAM billings were considered potential profit centers for owners, and thus, the billings sometimes included extraneous items that were not part of the actual common area operations. Tenants were so busy selling goods that they seldom stopped to check the billings before paying.

As the real estate recession of the late 1980s hit, however, tenants eager to control costs began closely inspecting the CAM billings and started the now-familiar process of auditing the common area records for waste or abuse. Even though the recession has subsided, retail tenants' aggressive analysis of CAM charges has not.

Because of this trend, it is in every manager's interest to examine his or her own CAM charges and make sure that he or she, as a fiduciary of both the owner and the tenant, is properly supervising the common area operations.

Know Your Allowable Charges

The most common error managers make in administering the implementation of a common area maintenance program is not knowing exactly what their lease agreements require. To design a maintenance program, a manager must know the restrictions, limitations, and allowances of each tenant's CAM provisions.

In complicated situations, it is not uncommon for lease agreements to, have conflicting provisions. This usually occurs with major tenants who prefer to use their lease forms. For example, one major tenant's lease may allow for repainting of the center no more than once every three years, while another major tenant's lease agreement may allow for the same service no more than once every five years. In cases such as this, it is the manager's responsibility to make the determination when the work will be performed and how the reimbursement will be handled. The situation is further complicated when owners use a lease for the smaller tenants that provides for different operating procedures than those specified for the majors.