In many commercial leases, tenants are required to pay a share of taxes, utilities, and common area maintenance charges ("CAM"). The tenant's share will typically be proportional to the amount of space leased by the tenant relative to the total rentable space of the building. This "additional rent" will fluctuate from year to year. It is not uncommon for landlords to overcharge their tenants for CAM. This is referred to as Common Area Maintenance Fraud.
If the tenant believes this is occurring, their best option is to audit the Landlord's expenses to ensure that all of the CAM paid by tenants is going toward actual expenses and that those expenses are for vendors and market value, rather than inflated prices.
However, unless the lease provides a right to an audit, the landlord is not required to allow one. In this case, the best option for the tenant is to rely on the implied covenant of good faith and fair dealing in the lease, or the fiduciary duty of the landlord (in the case where the Tenant prepays CAM before expenses are calculated) to obtain an accounting for expenses. However, in the absence of a right to audit in the lease, the landlord may provide evidence of its expenses by any reasonable manner that it selects. This means that the landlord can provide a simple list of its expenses, and the tenant will not be permitted to investigate further.
Therefore, in order to protect yourself against common area maintenance fraud, it is important that your commercial lease include a right to audit the landlord's records.
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