Case Study – Lease Abstraction and Financial Due Diligence
One Small CAM Error Results in Big CAM Refund for a Chain of Specialty Stores
The Service – CAM Audits/Retail
The Situation
The Client, a real Tenant located in New Wales, operating a chain of 65 restaurants, hired Complete Legal Outsourcing to conduct a Common Area Maintenance (CAM) audit on a trial sample of ten leases. The aim was to determine if their Landlords were charging appropriate CAM expenses as per the leases.
The Problem
Complete Legal Outsourcing thoroughly reviewed the CAM expenses pertaining to each lease, including CAM inclusions and exclusions as applicable to capped and uncapped expenses. It was discovered that one particular Landlord had erroneously included a significant charge under the capped expense category instead of billing the insurance charge as an uncapped expense as per the Lease terminology. As the Tenant had otherwise exceeded its capped expense, this charge should not have added any further expense to the Tenant. Since the Landlord was billing the charge under uncapped expenses, the Tenant had paid its full pro-rata share of the expense.
The Solution
Since the Landlord had engaged in this billing practice for over four years, there was an amount that was to be credited in favor of the Tenant.
The Result
The Client saved $ 5396.44 per year, Tenant received an immediate credit of $14,761.31 from the Landlord for the previous three years and for the remaining tenure, Client saved an additional $14,761.31 for not having to pay that expense.
Total Savings $ 34,919.06