CAM Charges During Closure and Force Majeure: What the Courts Decided
TL;DR: Courts consistently ruled that CAM charges continue during government-ordered closures when force majeure clauses exclude payment obligations, which most do. However, variable CAM components like cleaning and utilities should decrease during closure periods. Tenants who audited 2020-2021 reconciliations for inflated variable costs recovered thousands in overcharges.
force majeure and CAM obligations: A force majeure clause excuses non-performance during extraordinary events, but most commercial lease force majeure clauses explicitly carve out payment obligations. This means rent and CAM continue to accrue during government-ordered closures under standard lease language. The separate question of whether billed amounts accurately reflect reduced actual expenses is the basis for CAM disputes from closure periods.
40% of commercial CAM reconciliations contain material billing errors (Tango Analytics, 2023)
"For 2020 and 2021 reconciliations, landlords sometimes billed standard annual cleaning and utility budgets for properties that were substantially empty for months. You still owed CAM, but you did not owe for services that were not provided." — Angel Campa, Founder of CAMAudit
The COVID-19 closures of 2020 and 2021 produced an enormous volume of commercial lease disputes. Among the most contested questions: do tenants owe CAM charges when the government orders them to close?
The answer, as established through hundreds of court decisions, is largely: yes. But the analysis is more nuanced than that, and the litigation produced some tenant-favorable outcomes that matter for how you approach force majeure language in future leases.
What Force Majeure Clauses Actually Cover
A force majeure clause excuses a party's performance when an extraordinary, unforeseeable event prevents fulfillment of an obligation. Standard commercial lease force majeure clauses typically cover:
- Acts of God (natural disasters, floods, fire)
- Government actions (war, national emergency)
- Labor strikes
- Infrastructure failures
What most force majeure clauses explicitly do not cover: payment obligations. The clause usually reads:
"Force majeure events shall excuse the affected party's performance of non-monetary obligations under this Lease, but shall not excuse or delay the payment of rent, CAM, or any other monetary obligations."
The word "non-monetary" is the limiting factor. Courts across the country interpreted this language consistently: when the force majeure clause carves out payment obligations, rent and CAM continue to accrue regardless of whether the tenant can operate.
What COVID-Era Courts Decided
Most COVID closure cases went to landlords on the rent and CAM payment question. The reasoning:
- Force majeure clauses excluded payment obligations
- Rent abatement required a specific lease provision, which most leases did not have
- The impossibility doctrine (common law frustration of purpose) was narrowly applied and rarely succeeded on CAM claims
Cases where tenants had partial success:
- Where force majeure clauses were not limited to non-monetary obligations (unusual but not unheard of in older leases)
- Where the lease had explicit rent abatement provisions triggered by government orders
- Where the tenant could show that CAM expenses themselves were not incurred (e.g., the building was fully closed and no maintenance, cleaning, or utilities were consumed)
The last point is significant: in some cases, tenants successfully disputed the amount of CAM rather than their obligation to pay. If the building was closed and the landlord continued billing normal CAM amounts for services not rendered (cleaning of an empty building, utilities for shuttered space), courts were receptive to arguments that actual expenses were lower.
CAM and Partial Closures
Many businesses operated at reduced capacity under COVID protocols: occupancy limits, reduced hours, intermittent closure. In these situations, several CAM components behaved differently:
Fixed CAM components (management fees, insurance, property taxes): These continued regardless of occupancy. Courts consistently upheld landlords' right to recover them.
Variable CAM components (cleaning, utilities, supplies): These arguably should have decreased with reduced occupancy. Tenants who audited reconciliation statements from closure periods sometimes found landlords billing standard annual budgets for cleaning and utilities that were not being consumed.
If your business closed or operated at reduced capacity and you have not yet audited the reconciliation from that period, it may be worth reviewing variable CAM charges from those quarters.
Force Majeure and CAM Expense Reduction
Even if you owed CAM during closure periods, you may have been overcharged if actual expenses dropped.
Arguments tenants have made successfully:
- Cleaning costs should have decreased with reduced occupancy
- Utility costs should have decreased with reduced or no operations
- Parking lot maintenance costs should have decreased with no foot traffic
- Security costs changed (some properties added security for empty buildings, others reduced it)
The landlord has a duty to accurately report actual expenses. If the building was empty and expenses dropped, the reconciliation should reflect that.
Gross-Up Provisions and Force Majeure
Many leases include gross-up provisions: if the building is less than fully occupied, the landlord can gross up variable expenses to reflect what they would have been at full occupancy.
During COVID closures, landlords sometimes grossed up expenses based on hypothetical full occupancy even though the building-wide closure was not a normal vacancy scenario. Courts were mixed on whether gross-up provisions applied during government-mandated closure periods.
If your reconciliation from 2020 or 2021 includes grossed-up expenses, and the building was operating at significantly reduced capacity due to government mandate, this is worth reviewing.
What to Negotiate for Future Leases
The COVID litigation created a template for what to negotiate:
- Abatement trigger: Add a specific provision: if government order prohibits operation of your business, rent and CAM abate proportionally during the closure period.
- Non-monetary carve-out: Remove or limit the "non-monetary obligations" language in force majeure clauses to allow payment abatement in true closure scenarios.
- Actual expense requirement: Add language requiring the landlord to invoice based on actual expenses incurred during the period, not estimated or prior-year amounts.
- No gross-up during government-mandated closure: Explicitly exclude forced-closure periods from gross-up calculations.
Frequently Asked Questions
My business was ordered closed in 2020. Can I still dispute CAM charges from that period?
It depends on your lease's audit window. Most leases give 1 to 3 years after receiving the reconciliation to file a dispute. For reconciliations delivered in 2021 for the 2020 year, you may already be outside the window. Check your specific lease language and the reconciliation delivery dates.
The landlord billed full CAM during the months we were completely closed. Is that overcharge?
You still owed CAM during closure in most cases under standard lease terms. But whether the billed amount accurately reflects actual expenses is a separate question. If services were not provided during closure (cleaning, utilities reduced), the actual expense pool should have decreased. Request the expense breakdown and compare to comparable non-closure periods.
Our percentage rent was zero during COVID. Does that affect CAM?
Percentage rent and CAM are calculated separately. Zero sales may reduce percentage rent to zero, but CAM obligations are based on your base rent or square footage, not sales volume. They are independent obligations.
My force majeure clause does not have the "non-monetary obligations" carve-out. Does that help me?
Possibly. A force majeure clause with no payment carve-out could apply to monetary obligations if the court finds the event falls within the clause's scope. Review the exact language with a commercial real estate attorney for your specific situation.
Can I dispute CAM charges based on frustration of purpose even without a force majeure clause?
The common law doctrine of frustration of purpose argues that the entire purpose of the lease was frustrated by the closure. Most courts rejected this for commercial closures, finding that the purpose (occupying commercial space) was not entirely frustrated, even if business operations were disrupted. Courts distinguished between reduced utility and complete legal impossibility.
CAMAudit's detection engine compares reconciliation period billing against building occupancy data and flags periods where billed variable CAM exceeds what actual expenses for reduced-occupancy periods would support.
See also: How to Dispute CAM Charges, for the step-by-step dispute process applicable to any CAM overcharge finding.
Related: CAM Dispute Guide | CAM Reconciliation Deadlines and Dispute Windows
Frequently Asked Questions
Do I still owe CAM charges when the government orders my business to close?
In most cases, yes. Standard commercial lease force majeure clauses exclude payment obligations, so rent and CAM continue to accrue regardless of whether the tenant can operate. Courts across multiple jurisdictions ruled consistently during COVID-era litigation that payment obligations are not excused by force majeure events under standard lease language.
Can I dispute the amount of CAM charges even if I still owe them during a closure?
Yes. Even if you owed CAM during closure periods, you may have been overcharged if actual expenses dropped. Variable CAM components like cleaning, utilities, and parking lot maintenance should decrease during closure periods. If landlords billed standard annual budgets for services not actually provided, the reconciliation may not reflect actual expenses.
How do gross-up provisions interact with government-mandated closures?
During COVID closures, some landlords grossed up variable expenses to hypothetical full occupancy even though building-wide closure was not a normal vacancy scenario. Courts were mixed on whether standard gross-up provisions applied during government-mandated closure periods. If your 2020 or 2021 reconciliation includes grossed-up expenses during significant closure periods, this is worth reviewing.
What lease language should I negotiate to protect against future closure scenarios?
Request a specific abatement trigger if government order prohibits operation of your business, proportional rent and CAM abatement during the closure period, a requirement that the landlord invoice based on actual expenses rather than estimates, and an explicit exclusion of forced-closure periods from gross-up calculations.
Can I still dispute COVID-era CAM charges from 2020 or 2021?
It depends on your lease's audit window. Most leases give 1 to 3 years after receiving the reconciliation to file a dispute. For reconciliations delivered in 2021 for the 2020 year, you may already be outside the window. Check your specific lease language and the exact dates the reconciliations were delivered to determine whether any period remains open.