Utility Overcharge: Why You Should Not Pay for Other Tenants' Electricity in Your CAM
If your landlord is including utility costs for individually-metered tenant spaces or non-common-area services in your CAM pool, you are subsidizing expenses that belong to specific tenants. These misallocations typically run $2,000 to $8,000 per year in multi-tenant buildings.
Definition
A utility overcharge in CAM occurs when utility expenses for individually metered tenant spaces, vacant units, or non-common-area consumption are pooled into shared CAM charges allocated to all tenants. Only utility costs for genuinely shared spaces belong in the CAM utility pool: lobbies, parking areas, exterior lighting, HVAC for common corridors, and similar facilities used by all tenants collectively. Including tenant-specific or non-common-area utility costs in the pool inflates every tenant's share of expenses they did not consume and had no ability to control. CAMAudit's utility overcharge detection rule uses AI classification to evaluate each utility line item in the reconciliation and categorize it by consumption type, then flags any item that does not match common area consumption characteristics, including charges referencing specific unit addresses, sub-metered tenant spaces, or consumption categories inconsistent with shared facility operations.
Utility charges in CAM should reflect only shared consumption. Any utility cost tied to a specific tenant's space or to a non-common area is an improper pool allocation.
How we detect
- 1
CAMAudit uses AI classification to evaluate utility line items in your CAM reconciliation and categorize them by consumption type: common area, which is eligible, individually-metered tenant spaces, which are not eligible, vacant space, which is not eligible, and landlord-specific uses such as management offices or storage units, which are not eligible without explicit lease authorization.
- 2
CAMAudit's utility overcharge detection rule flags utility line items that do not match common area consumption characteristics, including line items referencing specific unit addresses, sub-metered tenant spaces, or consumption categories that are inconsistent with shared facility operations based on the lease definition of common areas.
- 3
CAMAudit generates a finding identifying the specific charge, the consumption category, and the reason it does not qualify as a shared common area expense. CAMAudit's finding includes the documentation request language you need to obtain the utility bills and sub-metering records under your audit rights clause.
Real-world example
A CAM reconciliation showed $22,000 in utility charges for "building services." The backup documentation revealed $14,400 for parking lot lighting and exterior common area power (appropriate), $4,200 for utilities in Suites 200 and 205 (individually metered tenant spaces), and $3,400 for the landlord's property management office space. CAMAudit flagged $7,600 as non-common-area utility charges that should not appear in the shared CAM pool.