Party Supply Chain
Celebrates CAM Correction

The Case

The Client, a retail Tenant operating a chain of approximately 50 party supply stores primarily in the Southeast and New England areas, hired LeaseProbe, LLC to conduct a Common Area Maintenance CAM) audit on a trial sample of 12 leases to determine if the Landlords were charging the correct and appropriate CAM expenses according to the Lease.

The Problem

LeaseProbe conducted a thorough examination of the CAM expenses of each lease and the specific terminologies of the Lease, including the CAM inclusions and exclusions as applicable to capped and uncapped expenses. It was discovered that one Landlord had erroneously included a significant insurance charge under the capped expense category instead of billing this insurance charge to the Tenant as an uncapped expense, per the Lease. As the Tenant had otherwise exceeded its capped expense, this charge should not have added any further expense to the Tenant. However, because that Landlord billed the charge under the uncapped portion of the bill, the Tenant had paid its full pro rata share of the expense.

The Solution

Since the Landlord had engaged in this billing practice for three years, the Tenant was due a credit for all three years of CAM payments. The Lease also had an additional three years until it expired in 2011, and an additional renewal option extending through 2016.

The Results

Given that the client saved $5,656.84 per year, the Tenant received a credit of $16,970.53 from the Landlord for the previous three years. It is fair to assume that given the remaining three years of the lease, the Client would have saved a total of $33,941.04 for all six years. Had the lease extended through the additional renewal option of 2016, the Tenant would have saved a total of over $62,225.24.