What courts decided about CAM obligations during COVID closures and force majeure events, and how to audit variable CAM charges from reduced-occupancy periods.
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Find My OverchargesSee a sample report firstTL;DR: Courts consistently ruled that CAM charges continue during government-ordered closures when force majeure clauses exclude payment obligations, which most do. However, variable CAM components like cleaning and utilities should decrease during closure periods. Tenants who audited 2020-2021 reconciliations for inflated variable costs recovered thousands in overcharges.
“CAMAudit flagged dozens of 2020 and 2021 reconciliations where landlords billed standard annual cleaning and utility budgets for properties that were substantially empty for months. You still owed CAM, but you did not owe for services that were not provided.”
The COVID-19 closures of 2020 and 2021 produced an enormous volume of commercial lease disputes. Among the most contested questions: do tenants owe CAM charges when the government orders them to close?
The answer, as established through hundreds of court decisions, is largely: yes. But the analysis is more nuanced than that, and the litigation produced some tenant-favorable outcomes that matter for how you approach force majeure language in future leases.
A force majeure clause excuses a party's performance when an extraordinary, unforeseeable event prevents fulfillment of an obligation. Standard commercial lease force majeure clauses typically cover:
What most force majeure clauses explicitly do not cover: payment obligations. The clause usually reads:
"Force majeure events shall excuse the affected party's performance of non-monetary obligations under this Lease, but shall not excuse or delay the payment of rent, CAM, or any other monetary obligations."
The word "non-monetary" is the limiting factor. Courts across the country interpreted this language consistently: when the force majeure clause carves out payment obligations, rent and CAM continue to accrue regardless of whether the tenant can operate.
Most COVID closure cases went to landlords on the rent and CAM payment question. The reasoning:
Cases where tenants had partial success:
The last point is significant: in some cases, tenants successfully disputed the amount of CAM rather than their obligation to pay. If the building was closed and the landlord continued billing normal CAM amounts for services not rendered (cleaning of an empty building, utilities for shuttered space), courts were receptive to arguments that actual expenses were lower.
Many businesses operated at reduced capacity under COVID protocols: occupancy limits, reduced hours, intermittent closure. In these situations, several CAM components behaved differently:
Fixed CAM components (management fees, insurance, property taxes): These continued regardless of occupancy. Courts consistently upheld landlords' right to recover them.
Variable CAM components (cleaning, utilities, supplies): These arguably should have decreased with reduced occupancy. Tenants who audited reconciliation statements from closure periods sometimes found landlords billing standard annual budgets for cleaning and utilities that were not being consumed.
If your business closed or operated at reduced capacity and you have not yet audited the reconciliation from that period, it may be worth reviewing variable CAM charges from those quarters.
Even if you owed CAM during closure periods, you may have been overcharged if actual expenses dropped.
Arguments tenants have made successfully:
The landlord has a duty to accurately report actual expenses. If the building was empty and expenses dropped, the reconciliation should reflect that.
Many leases include gross-up provisions: if the building is less than fully occupied, the landlord can gross up variable expenses to reflect what they would have been at full occupancy.
During COVID closures, landlords sometimes grossed up expenses based on hypothetical full occupancy even though the building-wide closure was not a normal vacancy scenario. Courts were mixed on whether gross-up provisions applied during government-mandated closure periods.
If your reconciliation from 2020 or 2021 includes grossed-up expenses, and the building was operating at significantly reduced capacity due to government mandate, this is worth reviewing.
The COVID litigation created a template for what to negotiate:
It depends on your lease's audit window. Most leases give 1 to 3 years after receiving the reconciliation to file a dispute. For reconciliations delivered in 2021 for the 2020 year, you may already be outside the window. Check your specific lease language and the reconciliation delivery dates.
You still owed CAM during closure in most cases under standard lease terms. But whether the billed amount accurately reflects actual expenses is a separate question. If services were not provided during closure (cleaning, utilities reduced), the actual expense pool should have decreased. Request the expense breakdown and compare to comparable non-closure periods.
Percentage rent and CAM are calculated separately. Zero sales may reduce percentage rent to zero, but CAM obligations are based on your base rent or square footage, not sales volume. They are independent obligations.
Possibly. A force majeure clause with no payment carve-out could apply to monetary obligations if the court finds the event falls within the clause's scope. Review the exact language with a commercial real estate attorney for your specific situation.
The common law doctrine of frustration of purpose argues that the entire purpose of the lease was frustrated by the closure. Most courts rejected this for commercial closures, finding that the purpose (occupying commercial space) was not entirely frustrated, even if business operations were disrupted. Courts distinguished between reduced utility and complete legal impossibility.
CAMAudit's detection engine compares reconciliation period billing against building occupancy data and flags periods where billed variable CAM exceeds what actual expenses for reduced-occupancy periods would support.
See also: How to Dispute CAM Charges, for the step-by-step dispute process applicable to any CAM overcharge finding.
Related: CAM Dispute Guide | CAM Reconciliation Deadlines and Dispute Windows