Tenant improvements customize individual spaces and are never a CAM pass-through. CAM expenses maintain shared areas and are allocated to all tenants.
Tenant improvements are modifications to a leased space made to suit a specific tenant's needs: buildouts, partitions, electrical work, plumbing changes, or finish upgrades. TI costs are typically funded by the landlord through a TI allowance or by the tenant directly, and they benefit only the specific tenant.
CAM expenses cover the maintenance and operation of shared building areas that benefit all tenants: lobbies, parking lots, elevators, landscaping, and building systems. These costs are allocated proportionally among all tenants through the annual reconciliation.
| Dimension | Tenant Improvements (TI) | CAM Expenses |
|---|---|---|
| Who benefits | Individual tenant only | All tenants in the building |
| Who pays | Landlord TI allowance or tenant directly | All tenants via proportionate share |
| Pass-through eligibility | Should never appear on CAM reconciliation | Standard pass-through to all tenants |
| Recurring vs. one-time | One-time at lease commencement or renewal | Recurring, billed annually |
| Audit flag if on reconciliation | Red flag, likely an improper charge | Expected, verify amounts and allocation |
Tenant improvement costs should never appear as a pass-through CAM charge. When a landlord includes TI costs (or costs of preparing vacant space for new tenants) in the operating expense reconciliation, every tenant subsidizes work that benefits only one party. This is one of the clearest examples of an excluded charge violation.
Having TI costs charged as CAM is strictly an overcharge because tenant improvements are never a legitimate operating expense. There is no scenario where TI costs should appear on a multi-tenant reconciliation. If you see buildout, construction, or space preparation costs on your reconciliation, these are almost certainly improper charges.
Upload two PDFs. 14 detection rules. Under 15 minutes. Free.
Upload two PDFs. 14 detection rules. Under 15 minutes. Free.
Next Best Step
Use a pricing and proof pass before you start an audit so the commercial case is clear.
Review the flat-fee audit model before you compare vendors any further.
See what the paid output looks like before you upload documents.
Run the free audit once you have enough proof to move.
Ready to skip the reading and document the overcharge directly?
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.
