Common area maintenance charges in a retail lease are:
Correct Answer
A) Tenant reimbursements of shared operating costs
Why this is correct: Common Area Maintenance (CAM) charges are tenant reimbursements for the landlord's operating costs of shared areas (e.g., parking lots, landscaping, security). They are typically pro-rated among tenants. Why the other choices are wrong: "A negotiated percentage of the tenant's gross sales" describes percentage rent, not CAM. "The landlord's profit above base rent" is incorrect; CAM recovers costs, not profit. "A one-time fee charged at lease signing" is a lease initiation fee, not ongoing CAM. Exam tip: CAM = cost recovery for shared operations. It's an expense pass-through, not profit.
Why This Is the Correct Answer
Why this is correct: Common Area Maintenance (CAM) charges are tenant reimbursements for the landlord's operating costs of shared areas (e.g., parking lots, landscaping, security). They are typically pro-rated among tenants. Why the other choices are wrong: "A negotiated percentage of the tenant's gross sales" describes percentage rent, not CAM. "The landlord's profit above base rent" is incorrect; CAM recovers costs, not profit. "A one-time fee charged at lease signing" is a lease initiation fee, not ongoing CAM. Exam tip: CAM = cost recovery for shared operations. It's an expense pass-through, not profit.
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