CAM Refund a Tasty Treat
for Big Restaurant Chain

The Case

The Client, a retail Tenant operating a chain of over 450 restaurants across the U.S., hired LeaseProbe, LLC to conduct a Common Area Maintenance (CAM) audit on a trial sample of 9 leases to determine if the Landlord was charging the Tenant the correct and appropriate CAM expenses according to the Lease.

The Problem

After reviewing the relevant shopping center tenant roster, LeaseProbe noted that the shopping center contained various "Pad Site Contributors." The specific Lease audited contained provisions allocating "Pad Site Contributions" to the overall Common Area Maintenance charge for the Tenant, thereby reducing the overall expenses to be passed through to the Tenant. It was determined that the Landlord erroneously failed to correctly allocate the contributions it received from the Pad Site tenants.

The Solution

Since the Landlord had engaged in this billing practice for two years, the Tenant was due a credit for both years of CAM payments. The erroneous calculation, already undetected for two years, would have likely continued for six additional years, through the end of the lease in 2014.

The Results

Tenant received a credit of $3,634.85 per year, or $7,269.70 for the two year error. As the Tenant's two year CAM bill was approximately $16,000, the credit it received amounted to an almost 50% credit of its entire CAM bill. It is also fair to assume that if the Tenant saved about the amount per year on average for this error on the remainder of the lease, then they would have saved a total of $29,078.80 over the life of the lease. This was just for one miscalculation from one lease.