How a Lease Lawyer Reviews Cam Charges and Personal Guarantees

Common area maintenance (CAM) may include parking, landscaping, lighting, security, and repairs. A triple-net (NNN) lease commonly adds property taxes, insurance, and maintenance costs to base rent. Compare the commercial lease agreement with its exhibits. Check the tenant's percentage share, treatment of vacant space, and whether management fees or capital improvements are included.

An annual cap may exclude taxes, insurance, or extraordinary repairs. Check how the landlord reconciles estimated CAM payments with actual costs and handles overpayments. Audit provisions should identify available records, objection deadlines, and whether disputed charges remain payable. Short deadlines can limit an audit right's usefulness.

Qualified tenants may include microenterprises, restaurants with fewer than 10 employees, and qualifying nonprofits with fewer than 20 employees. Under Business and Professions Code § 18000, a microenterprise generally has five or fewer employees, including the owner, and limited access to financial capital. Tenants must provide written notice and employee-count self-attestation. For leases other than short periodic tenancies, notice is generally required before or upon execution and annually thereafter. Covered short periodic tenancies follow a previous-12-month notice requirement. Section 1950.9 generally applies to specified leases or tenancies executed, commenced, or renewed from January 1, 2025, with exceptions for certain existing arrangements.

Landlords must notify prospective qualified tenants of their right to inspect operating-cost records before lease execution. Upon written request, they generally have 30 days to provide documentation and cannot charge covered recovery fees beforehand. Records include dated, itemized quotes, contracts, receipts, or invoices, an allocation breakdown, and a signed landlord attestation.

Covered costs must arise within the preceding 18 months or be reasonably expected within the following 12 months. Landlords cannot recover amounts already paid or reimbursed. Allocation changes increasing a qualified tenant's share require written notice and documentation. Violations may provide an affirmative defense in possession actions based on unpaid operating-cost fees and statutory civil remedies, including actual damages and potential attorney fees. Qualified tenants cannot waive their § 1950.9 rights.

A guaranty may cover rent, CAM charges, taxes, repairs, damages, and collection expenses. Check whether it extends beyond the original term. Civil Code § 2814 defines a continuing guaranty involving future liabilities under successive transactions, but coverage depends on the agreement. Changes without the guarantor's consent may raise issues under § 2819, subject to waivers and applicable law. Closing an LLC does not automatically discharge an existing guaranty.

A limited guaranty may specify a maximum amount, expiration date, or release conditions. Confirm whether release requires notice, payment, surrender, or the landlord's written approval. Assigning the lease or transferring the business does not necessarily release the guarantor.

Renewal options may require advance written notice. Check deadlines, rent adjustments, and guaranty extensions. For qualified commercial tenants in covered short periodic tenancies, Civil Code § 827(b) generally requires 30 days' notice for rent increases of 10% or less and 90 days for larger increases, considering the preceding 12 months. Mailing rules may add time. These requirements do not establish a general rent cap or automatically govern fixed-term renewals.

Declining sales ordinarily do not justify unilateral cancellation. Under Civil Code § 1951.2, breach and abandonment or termination of possession following a breach may expose tenants to unpaid rent and qualifying future losses. Certain losses are reduced by amounts the tenant proves could reasonably have been avoided. Postjudgment damages require additional conditions under § 1951.2(c).

Civil Code § 1951.4 permits a different remedy when the lease authorizes it, possession remains unterminated, and qualifying assignment or subletting rights exist. The landlord may then recover rent as it becomes due after breach and abandonment. Review assignment restrictions alongside default provisions.