Money collected from tenants and held by the landlord to fund future capital repairs and replacements. Unlike actual operating expenses, reserves are not incurred costs - contributions to reserves are generally excluded from CAM in most commercial leases.
Reserve contributions differ from actual expenditures: a reserve is a prepaid fund for future costs; an expense is a cost incurred in the current period. Most commercial leases explicitly exclude reserve contributions from the operating expense pool.
A landlord collected $200,000/year in "capital replacement reserves" through the CAM pool. The reserve account was never used - the landlord funded actual replacements through financing and billed them separately. Tenants effectively paid for the same costs twice.
Check whether your lease excludes reserves. If it does, request confirmation that all CAM charges represent actual expenses incurred - not amounts set aside for future use.
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Start Free AuditThis 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.