Arizona's Phoenix and Scottsdale commercial markets are growing fast. Here is what CAM overcharges look like in Arizona leases and how to recover them.
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See How It WorksSee a sample report firstPhoenix and Scottsdale have absorbed a decade of rapid commercial real estate expansion. New retail corridors, medical office campuses, restaurant pads, and industrial-adjacent service centers have all brought one consistent companion: NNN leases with CAM structures that put tenants on the hook for operating costs they often cannot easily verify.
40% of CAM reconciliations contain material errors (Tango Analytics / PredictAP, 2023)
Fast-growing markets create specific CAM risk conditions. Landlords negotiate from strong leverage positions during high-demand periods, and lease terms that were accepted during lease-up often contain CAM provisions that are aggressive or ambiguous. When demand softens and buildings operate with vacancy, those provisions may still be applied in ways that favor the landlord. I built CAMAudit to detect both the structural billing errors and the more subtle calculation abuses that show up in markets like Phoenix.
Arizona commercial tenants have six years to bring a written contract claim under Ariz. Rev. Stat. § 12-548. Your commercial lease is a written contract. A CAM overcharge is a breach of that contract. You generally have six years from when each overpayment was made to bring a recovery action.
Arizona courts apply accrual from the date of breach — typically the date each annual reconciliation overpayment was made. This means each year's reconciliation that contained an overcharge runs its own six-year clock independently. A reconciliation delivered in March 2020 has a deadline of approximately March 2026.
Arizona has no statute specifically protecting commercial tenants in CAM disputes. The Arizona Residential Landlord and Tenant Act (Ariz. Rev. Stat. § 33-1301 et seq.) applies to residential tenants only. Commercial CAM disputes are governed entirely by the lease contract and general Arizona contract law.
Under Arizona's framework, the landlord must substantiate CAM charges if the lease requires supporting documentation. If your lease includes an audit clause (and most institutional-quality leases do), that clause defines your right to request records, the timing, and the procedure. If the lease is silent, you have the right to demand documentation as a party with a contractual interest in the accuracy of the billing, but there is no statutory mechanism compelling the landlord to respond.
Arizona's legal prejudgment interest rate is 10 percent per annum under Ariz. Rev. Stat. § 44-1201. If your lease specifies a different rate, the contract rate applies. A six-year recovery with 10 percent interest substantially increases the total value of a documented CAM claim compared to states with lower legal interest rates.
Arizona's commercial real estate boom — particularly in the Phoenix metro between 2015 and 2024 — gave landlords significant negotiating power. Lease terms signed during high-demand periods often include:
Understanding what your lease actually permits is the foundation of every CAM dispute analysis.
Phoenix is one of the largest retail real estate markets in the country by square footage. Retail tenants — particularly restaurants, fitness centers, and service tenants in strip centers along the 101, I-10, and Loop 202 corridors — encounter the following most frequently:
Management fee overcharges. Rule 3 checks whether the management fee was calculated on the correct base. Arizona retail leases commonly permit a 3–5 percent management fee on "operating expenses" or "CAM charges." The error occurs when the landlord applies that percentage to a base that includes real estate taxes, insurance, and capital expenditures — items typically excluded from the CAM pool before the fee is calculated. On a mid-size retail tenancy with $40,000 in annual CAM, a management fee applied to a $20,000 overcounted base adds $600–$1,000 in annual overcharges.
Pro-rata share errors. Rule 4 checks your stated percentage share against the ratio of your leased SF to the actual GLA used as the denominator. In Phoenix power centers and lifestyle centers with pad tenants, the GLA denominator sometimes excludes anchor stores or freestanding pads in a way that inflates every inline tenant's share. Even a 2 percent denominator error costs you real money across six years.
Capital expense misclassification. Rule 12 and Rule 2 flag capital improvements billed as operating costs. Phoenix commercial properties — many built in the 1980s and 1990s — have aging infrastructure. Parking lot full replacements (versus overlay or seal-coat maintenance), major HVAC system replacements, and roof structure replacements are capital expenditures that most leases exclude from CAM. When they appear as line items in an annual operating expense reconciliation, they may be outside the permitted scope.
CAM cap violations. Rule 6 checks whether the year-over-year CAM increase exceeds your lease's cap. Arizona retail tenants who negotiated caps in the early 2010s and renewed during the 2018–2022 demand surge sometimes had their cap base reset at the new rent commencement, stripping years of compounded cap protection and allowing a jump in the first year of the renewal term.
Scottsdale and the broader northeast Phoenix medical corridor — covering areas near Scottsdale Road, Pima Road, and Frank Lloyd Wright Boulevard — has a dense concentration of medical office buildings with NNN or modified gross leases. Medical office CAM issues often include:
Base year errors. Medical office leases frequently use a base year stop rather than a full NNN structure. The tenant pays CAM above the base year's operating expense level. Rule 7 checks that the base year was correctly established. A landlord who uses a low-occupancy year or an artificially suppressed cost year as the base inflates every subsequent year's above-stop obligation.
Controllable expense cap overcharges. Some Scottsdale medical office leases cap controllable expenses — landscaping, janitorial, management — separately from non-controllable items like insurance and taxes. Rule 8 checks that items are correctly classified and that the controllable cap has not been exceeded by misclassifying controllable costs as non-controllable.
Gross-up violations. Medical office buildings sometimes have prolonged vacancies during tenant transitions or major leasing cycles. A gross-up provision adjusts variable expenses to a hypothetical full-occupancy level, which can significantly inflate billed costs during high-vacancy periods. Rule 5 checks that only variable costs were included in the gross-up calculation and that fixed costs like property taxes and insurance were not grossed up.
Locate and read the audit rights provision. Note the deadline for requesting records after the annual reconciliation delivery — the typical range is 90 to 180 days. If you are approaching that window for a recent year, prioritize that year's audit request immediately. For older years that are within the six-year statutory period but outside the lease's audit clause window, consult a commercial lease attorney about whether a statutory claim remains available.
Arizona has no statutory delivery method requirement for commercial CAM demand letters. Certified mail is the standard; if your lease permits email notice, send both. Your request should:
Upload your lease and annual CAM reconciliation statements to CAMAudit. The platform runs all 14 detection rules and returns a flagged report in under 15 minutes. Each flagged issue includes the specific lease provision it may violate, the dollar impact, and the supporting calculation. This becomes the evidence base for your demand letter.
Tabulate the findings year by year across the full six-year lookback. Apply Arizona's 10 percent prejudgment interest rate under Ariz. Rev. Stat. § 44-1201 if applicable. Present the claim as a specific dollar amount with supporting detail by category.
A written demand letter — referencing the overcharge by category, the specific lease provision involved, and the recovery amount — is the most effective tool for initiating a resolution. CAMAudit generates a dispute letter draft grounded in the audit findings and the relevant Arizona legal framework. Request a response within 30 days.
Arizona commercial landlords respond to well-documented demand letters. The most common outcomes:
Credit negotiation. Landlords offer a credit against future CAM obligations equal to some portion of the claimed amount. This is the path of least resistance for both parties: the landlord avoids record disclosure and potential litigation; the tenant recovers a portion of the overcharge without litigation cost.
Full or partial reimbursement. For smaller claims or cases where the overcharge is mathematically clear — a pro-rata share error or a management fee calculated on the wrong base — landlords sometimes acknowledge and reimburse without extended negotiation.
Dispute and litigation. If the landlord contests the findings, claims under $35,000 can be filed in Arizona Justice Court. Larger claims are filed in Superior Court. Arizona courts apply a strong written contract enforcement policy; the outcome generally depends on how clearly the lease language supports the tenant's position.
Arizona's six-year window gives tenants meaningful time to prepare a methodical, well-documented claim.
| Item | Detail |
|---|---|
| Written contract SOL | 6 years (Ariz. Rev. Stat. § 12-548) |
| Commercial CAM statute | None |
| Accrual rule | Date of breach (each overpayment) |
| Prejudgment interest rate | 10% per annum (Ariz. Rev. Stat. § 44-1201) |
| Audit rights | Lease-defined only |
| Demand delivery | No statutory requirement; certified mail is conventional |
How many years back can Arizona commercial tenants recover CAM overcharges?
Arizona's statute of limitations for written contracts is 6 years under Ariz. Rev. Stat. § 12-548. Each annual reconciliation that contained an overcharge triggers its own 6-year window from the date the overpayment was made. So a tenant who has been in a lease for 8 years can potentially recover overcharges from the last 6 reconciliation cycles, subject to any shorter windows written into the lease's audit clause.
Does Arizona have a law specifically protecting commercial tenants in CAM disputes?
No. The Arizona Residential Landlord and Tenant Act applies only to residential tenants. Arizona commercial tenants rely on general contract law and the lease terms. Audit rights, dispute windows, and documentation obligations all come from the lease itself. The 6-year statute of limitations under Ariz. Rev. Stat. § 12-548 applies to written contracts generally, which includes commercial leases.
What makes Phoenix retail leases particularly risky for CAM overcharges?
Phoenix's rapid market growth between 2015 and 2024 gave landlords significant leverage to negotiate CAM provisions with fewer tenant protections — broader management fee definitions, shallower exclusion lists, and caps that reset on renewal. These provisions create systematic overcharge risk, particularly when the building transitions to lower occupancy: gross-up provisions can inflate costs, and management fees calculated on over-inclusive bases produce compounding errors. CAMAudit runs all 14 detection rules against your specific lease and reconciliation to identify which of these patterns applies to your situation.
What is the typical interest rate applied to Arizona CAM overcharge recoveries?
Arizona's legal prejudgment interest rate is 10% per annum under Ariz. Rev. Stat. § 44-1201. If your lease specifies a different interest rate for overcharge claims or disputes, the contract rate applies. The 10% rate, applied over a 6-year recovery window, can add meaningfully to the total value of a documented claim — particularly for overcharges that began early in a long lease term.
Legal Disclaimer: This article provides general educational information about Arizona commercial lease law and CAM dispute rights. CAM audit rights, statute of limitations, and dispute procedures vary by lease and jurisdiction. Consult a licensed Arizona attorney for advice specific to your situation.
