The cost of inspecting, testing, and maintaining fire alarm systems, sprinkler systems, emergency lighting, and other life safety equipment as required by local fire codes. These costs are commonly passed through to tenants as part of CAM.
Fire alarm and life safety testing includes annual fire alarm panel inspections, sprinkler flow tests, fire extinguisher servicing, emergency exit sign battery checks, smoke detector calibration, and fire department connection (FDC) inspections. Local fire codes and insurance carriers dictate testing frequency. These are legitimate operating expenses, but capital upgrades to fire suppression systems (panel replacements, riser installations) should be treated separately.
A landlord included a $92,000 fire alarm panel replacement in the annual life safety testing line item rather than capitalizing it. The panel had a 15-year useful life, but the full cost appeared as a single-year operating expense, inflating CAM by $4.60 per square foot for every tenant.
Review the life safety line item for any expense that looks like a system replacement rather than routine testing. Annual testing typically costs $2,000 to $8,000 for a mid-size building. If the number is significantly higher, request the vendor invoices to determine whether capital work was bundled in.
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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.
