Glossary
Lease Types
Ground Lease
A lease where the tenant leases the land only and typically owns the building and improvements on it. Because the tenant already owns the structure, CAM pool scoping looks different: a cost the tenant might otherwise dispute as an improper capital charge may actually belong in the tenant's own capital budget instead.
Firm impact
A ground lease changes what counts as a legitimate audit target. Firms need to confirm upfront which costs the landlord is even responsible for billing, since a ground lease tenant may be paying for their own building's upkeep directly rather than through a landlord-run CAM pool.
How this gets abused
A ground lease tenant assumed their CAM audit engagement would cover roof and structural repairs the same way a typical NNN lease would. Because the tenant owns the improvements under the ground lease, those repair costs were never part of any landlord-billed CAM pool, and the engagement scope had to be corrected before any findings could be produced.
Practitioner note
Confirm who owns the improvements before scoping a ground lease engagement. If the tenant owns the building, a landlord-run CAM pool may only cover land-related costs like ground rent escalations, not building maintenance.
Related terms
FAQ
Questions about ground lease
Does a ground lease tenant pay CAM charges?
It depends on the lease. Since the tenant typically owns the building, CAM charges on a ground lease are usually narrower than a standard NNN lease, often limited to land-related costs rather than building maintenance.
What should a firm confirm before auditing a ground lease?
Who owns the improvements, and which cost categories the landlord is actually responsible for billing. This determines whether a CAM audit engagement even applies, and if so, how narrow the scope should be.
You know the term. Now check the math.
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