Direct expenses are billed to the tenant who incurs them. CAM pool costs are shared by all tenants. Watch for tenant-specific costs hiding in the shared pool.
Direct expenses are costs attributable to a specific tenant or space and billed to that tenant individually. Examples include separately metered utilities, tenant-specific HVAC after-hours charges, and above-standard janitorial services requested by an individual tenant.
CAM pool allocation places all operating expenses into a shared pool and divides them among tenants based on pro-rata share. Even if one tenant uses significantly more of a particular service, the cost is spread across all tenants proportionally to their square footage.
| Dimension | Direct Expenses | CAM Pool Allocation |
|---|---|---|
| Cost attribution | Charged to the tenant who incurred the cost | Shared among all tenants by pro-rata share |
| Fairness | Pay for what you use | Pay a proportionate share regardless of usage |
| Metering requirements | Individual meters or tracking needed | No individual tracking required |
| Audit approach | Verify the direct charge is accurate and actually your cost | Verify the pool total and your share calculation |
| Common examples | Separately metered electricity, after-hours HVAC | Landscaping, common area cleaning, elevator maintenance |
Some landlords move expenses that should be direct-billed (like a restaurant tenant's grease trap maintenance) into the shared CAM pool. This forces all tenants to subsidize costs generated by specific tenants. Conversely, landlords may direct-bill a tenant for costs that should be shared, effectively double-charging if those costs also appear in the pool.
Pool allocation of direct expenses is worse for most tenants because they end up subsidizing other tenants' disproportionate usage. A restaurant in a retail center may generate 5x the waste removal costs of a clothing store, but pool allocation splits those costs equally by square footage.
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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.
