Don't Use "Supervise" or "Administer" When Describing Management Fees

When describing management fees that you'll pass through as a CAM cost or an operating expense, don't depend on synonyms for “manage” or “management” to convey your meaning. If you use only the words “supervise and administer” or “supervision and administration” a tenant may argue that the lease doesn't authorize you to pass through “management” fees. So you may get stuck footing the bill for them, warns Houston attorney John S. Hollyfield.

For example, if your lease said that CAM costs include “all costs…to supervise and administer common areas…which costs may include fees paid to a third party in connection with same,” but the lease didn't mention “management” fees, your tenant may refuse to pay them when you try to pass them through as a CAM cost. If you sue the tenant for nonpayment, claiming that the words “supervise and administer” were synonymous with “management” and authorized you to pass through the management fees, the tenant could argue that nothing in the lease authorized passing through that type of fee. And a court could rule that you violated the lease by doing so. “You must be able to adequately prove that ‘supervise and administer’ meant ‘manage’ or ‘management’ for purposes of passing through management fees as a CAM cost,” Hollyfield stresses.