The landlord's annual projection of Common Area Maintenance expenses, used to calculate the estimated monthly payments tenants make throughout the lease year. At year-end, the CAM budget is compared against actual expenses in the reconciliation statement. If actuals come in below the budget, tenants receive a credit or refund. If actuals exceed the budget, tenants owe a true-up payment.
Landlords prepare a CAM budget at the start of each lease year by estimating operating costs for the property: maintenance contracts, utilities, insurance, management fees, and similar items. Each tenant's estimated monthly payment equals (projected annual CAM expenses × tenant pro-rata share) ÷ 12. Most leases allow landlords to revise the budget mid-year if material variances arise. The budget is not capped — it is a projection, not a binding limit. The final cap on what a tenant owes comes from lease-level CAM caps and exclusions, applied during reconciliation against actual costs.
A landlord consistently sets the CAM budget 25–30% above prior-year actuals to collect inflated monthly estimates. At year-end reconciliation, the actuals are still below the inflated budget, so the tenant receives a small credit, but has effectively given the landlord an interest-free loan of the overpayment for twelve months.
Request a copy of the CAM budget at the start of each lease year and compare it against the prior two years of actual reconciliation statements. If the budget exceeds historical actuals by more than 10–15%, ask for line-item justification. If actual CAM comes in below budget, you are owed a credit — verify the reconciliation math.
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Find My OverchargesThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.
