The short answer
CAM charges (common area maintenance) are the share of a multi-tenant property's shared operating costs that a lease passes through to each tenant, such as landscaping, refuse collection and parking lot lighting, and under many net leases taxes and insurance as well. Landlords usually bill estimates monthly and reconcile to actual cost after the year closes, so on any sale date some tenants owe money and others are owed refunds. In an exchange, how those balances are settled on the closing statement decides whether the full price reaches your intermediary.
At a glance
| Who pays | Tenants, in the shares their leases set; the lease controls what is recoverable |
|---|---|
| Typical items | Landscaping, refuse collection, parking lot and walkway lighting, often taxes and insurance |
| At sale | Year-to-date estimates collected are compared with actual costs and prorated between seller and buyer |
| Exchange risk | A buyer credit for refunds you owe reduces the wire to your intermediary |
CAM is a lease term, and bank examiners describe the usual split.
No tax rule defines CAM; the lease does. The OCC handbook on commercial real estate lending says retail leases are commonly written on a net basis, with tenants reimbursing common area maintenance including landscaping, refuse collection, taxes, insurance and lighting of parking lots and walkways, while the landlord usually keeps the roof and outer walls. Landlords of multi-tenant industrial property are typically responsible for common area maintenance and recover it from tenants.
The handbook adds that terms vary from lease to lease, so each lease must be read to see which costs the landlord carries. For a buyer that means CAM recoveries in a rent roll or trailing twelve months statement are only as good as the leases behind them.
A hypothetical: $12,000 of over-collected CAM at a mid-year closing.
Hypothetical figures: you sell a strip center on June 30 for $2,500,000. Tenants have paid $60,000 of estimated CAM for the year, and actual costs to date are $48,000. The $12,000 excess belongs to the tenants and will be refunded at the year-end reconciliation, which the buyer will run, so the buyer asks for a $12,000 credit.
If that credit comes off the proceeds, your intermediary receives $12,000 less than the price you must reinvest. The refund is your own obligation to tenants, not a closing cost, so the cleaner route is to pay it from your own funds outside the exchange. Run your own numbers with your CPA.
The reverse case needs a contract term too. If actual costs run ahead of estimates, tenants owe a shortfall at the year-end reconciliation, part of it for months you owned the building. Agree in the purchase contract who bills it and how the buyer remits your share, and treat that amount as part of your operating results for the year with your CPA.
It bites on the settlement statement and in the tenant estoppels.
Reg. section 1.1031(k)-1(g)(7) disregards prorated rents and transactional items such as commissions, prorated taxes and title fees when testing whether you received exchange money. A CAM refund owed to tenants is neither, which is why it is grouped with security deposits in security deposits, rent prorations and boot.
Tenants often raise CAM disputes in their estoppel certificates, so run the reconciliation before you send them out. The line-by-line review of the closing statement is in the settlement statement for a 1031.
Related questions
Is CAM the same as a triple net lease?
Not exactly. CAM covers the costs of shared areas, while a net lease can also pass through taxes and insurance; the OCC handbook describes retail leases that bill all of these as reimbursements. Read the expense clause rather than the label.
Can exchange funds pay my share of CAM at closing?
Only costs that are transactional items under the regulation can come from exchange funds without risk. Operating costs you owe for your period of ownership are better paid from your own account; see closing costs paid from exchange funds.
Does a DST investor deal with CAM?
Not directly. The property's leases, and any master lease, govern expense recoveries, and investors see the result in the trust's reporting rather than billing tenants themselves.
Sources
Checked against these publications on September 30, 2026. Rules and figures change; confirm the current version with your CPA or attorney before you act. This page is general information, not tax or legal advice.