Commercial Lending T.I.M vs. C.A.M

T.I.M vs. C.A.M

The term “C.A.M” stands for “Common Area Maintenance”, however this term is being widely used to describe the “NNN” additional rent that a Tenant must pay the Landlord to cover for Property Taxes, Property Insurance and Property Maintenance. I strongly believe that the use of this term brings misinterpretation to the definition itself. To better understand these definitions, I would like to present some concepts for “CAM” as follows:

• Common Area Maintenance (CAM): This is the amount of Additional Rent charged to the tenant, in addition to the Base Rent, to maintain the common areas of the property shared by the tenants and from which all tenants benefit. Examples include: snow removal, outdoor lighting, parking lot sweeping, repairs, waste removal painting, etc.
• Common area maintenance (CAM): An additional, annual charge often assessed to tenants for maintenance of the property's "common area", such as its entryways, hallways or bathrooms.

I could add some other definitions arriving to the same basic concept: “Maintenance/Management Performed in the Common Areas of the Property”. It is a mistake and a misconception to utilize the term C.A.M. to define the NNN pass-through which includes Taxes, Insurance and maintenance. A most proper term should be T.I.M. which stands for Taxes, Insurance and maintenance. The T.I.M. can be defined as:

• Taxes, Insurance and Maintenance/Management (T.I.M): This is the amount of Additional Rent charged to the tenant, in addition to the Base Rent, to cover for the Property Taxes, The Property Insurance and to maintain and manage the common areas of the property shared by the tenants and from which all tenants benefit.

This term can even be tailored to an “N” or “NN” type of leases, by defining it as “M” or “C.A.M” for maintenance or “I.M.” for insurance and maintenance, respectively.

There is a lot of semantics in the different definitions we use in the day to day handling of our business; however I strongly believe that the clearer the definitions are presented the better to avoid any type of confusion between the involved parties in a transaction.

JM Padron, CCIM