Is parking lot resurfacing a CAM expense or a capital expenditure?

Full resurfacing (mill-and-pave) is a capital expenditure because it restores the parking lot to its original condition and extends its useful life. Routine crack sealing and pothole patching are operating expenses. Your lease should define the threshold — if it does not, apply the IRS bright-line rule: costs that restore property to "like new" condition or adapt it to a new use are capital in nature.

My landlord resurfaced the entire parking lot and passed 100% of the cost through CAM in one year. What can I do?

Challenge the charge as an improperly expensed capital improvement. Request all vendor invoices and the scope of work. If the documentation confirms a full resurfacing, demand the cost be amortized over the asset's useful life (15-20 years) with only the annual amortization portion included in CAM.

Is parking lot resurfacing a CAM expense or a capital expenditure?

Full resurfacing (mill-and-pave) is a capital expenditure because it restores the parking lot to its original condition and extends its useful life. Routine crack sealing and pothole patching are operating expenses. Your lease should define the threshold — if it does not, apply the IRS bright-line rule: costs that restore property to "like new" condition or adapt it to a new use are capital in nature.

My landlord resurfaced the entire parking lot and passed 100% of the cost through CAM in one year. What can I do?

Challenge the charge as an improperly expensed capital improvement. Request all vendor invoices and the scope of work. If the documentation confirms a full resurfacing, demand the cost be amortized over the asset's useful life (15-20 years) with only the annual amortization portion included in CAM.

Parking Lot Maintenance & Repair: CAM Line Item Audit Guide

Routine upkeep of parking surfaces including sweeping, crack sealing, pothole patching, and standard surface maintenance.

Recoverability & Controllability by Lease Type

Lease Type	Recoverable?	Controllable?
NNN	Yes	Yes
Modified Gross	Yes	Yes
Full-Service Gross	No	Yes

CapEx Risk: This line item is commonly used to disguise capital expenditures as operating expenses. Verify all invoices against GAAP standards.

Approximate budget share: 3-6% of total CAM pool.

Common Abuse Patterns

A full mill-and-pave resurfacing job — a capital replacement — is billed as "routine patching." The entire cost hits the CAM pool in one year instead of being amortized.

Red Flags to Watch

"Asphalt replacement," "sub-base repair," or "full resurfacing" on invoices
A single year's parking lot costs exceed 3× the prior year average
Line striping billed simultaneously with asphalt companies indicating a complete rebuild
No documented history of prior crack sealing or patching before the large invoice

CapEx Risk Alert

This line item is commonly used to disguise capital expenditures as operating expenses. Capital expenditures must be excluded from CAM or amortized over their useful life per GAAP. If you see unusually high or one-time charges in this category, request all invoices and scope-of-work documentation before paying.

Your Right to Dispute

Demand documentation distinguishing routine patching from structural resurfacing. Per IRS and GAAP standards, parking lot reconstruction is a capital expenditure and must be excluded from annual CAM or amortized over its useful life (typically 15-20 years).

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Related Resources

GlossaryCAM Glossary GlossaryControllable Expenses ResourcesCAM Audit by State ToolsFree CAM Audit Tools

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This 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.

Lease Type

Recoverable?

Controllable?

NNN

Yes

Modified Gross

Yes

Full-Service Gross

Yes

Red Flags to Watch

"Asphalt replacement," "sub-base repair," or "full resurfacing" on invoices

A single year's parking lot costs exceed 3× the prior year average

Line striping billed simultaneously with asphalt companies indicating a complete rebuild

No documented history of prior crack sealing or patching before the large invoice

CapEx Risk Alert