Charge a CAM Management Fee for owner-managed commercial RE?
My father purchased and did the day-to-day management of two NNN commercial real estate properties, under the guise of an LLC of which he and my mother were sole members.  He delighted in spending his retirement playing with these investments.  He passed away recently, and my mother and I are trying to figure out how to submit CAM reconciliations to the two tenants.  

We were able to find an old CAM reconciliation he had sent a tenant for 2013; we are using this as a template.  It looks straightforward, with places to put trash, insurance, snow removal, etc.  

One thing isn't clear to me.  On the old 2013 CAM reconciliation, I see "Management", and a dollar value that appears to be 4% of the gross rental for that year.  This agrees with a line I found in the lease agreement:

    Tenant shall pay monthly to Landlord &lt;...&gt; reasonable management and administration costs not to exceed four (4%) percent of the total gross rents from the leasing of the property &lt;...&gt;

Is it customary and expected, when a clause like this appears, for the landlord automatically to charge a management/admin fee equal to exactly 4% of the total rent?  Even when the management &amp; admin is done by the owner in lieu of a professional management company?  This appears to be what he had done in 2013 and I would assume (if only we could find it) it's what he did for 2014.  The amount of time my mother and I have put into this can easily be converted to a reasonable hourly wage to meet this 4% figure, should we be asked to provide details of this specific charge.

Your advice is appreciated!  I want to make sure we're not unknowingly doing anything underhanded that would upset the tenant or be dishonest.  Thanks for your help!
[{"id": "d0adlq7", "text": "I'm in the same exact boat as you. I have a small commercial building that I'm contemplating adding a admin fee on top. \n\nNormally, on most commercial leases in big cities, there is a clause similar to yours that states a certain percentage is added on to normal CAM charges as an admin fee. \n\nNo justification is needed, it doesn't matter who managed or did the work, that admin fee applies.\n\n4% is pretty reasonable, in Canada, we charge 15% admin for CAM, 15% admin if we have to do the repairs etc....\n\nThe hard part is communicating and getting that money if you dad has not been keeping on top of this. Fortunately, with commercial real estate, there are very few rules governing tenancies and what you have in writing (4%) will apply and can be recouped anytime at landlord's sole discretion (unless you have a specific time frame you have to communicate it by).\n\nDo up an invoice and call everything that is owed \"arrears\" then break it down as best as possible. ", "replies": [{"id": "d0adreg", "text": "Thanks for your input, that pretty much corroborates what I was thinking.\n\nI'm not sure I follow your note about communicating the getting the money.  For communicating this fee, I would assume that since the management fee appeared on the 2013 (and I can only assume the 2014) CAM reconciliations, there is no surprise if it appears on the 2015 one we're preparing.  For getting the money, it seems just a matter of including it on the CAM reconciliation spreadsheet along with the 2015 power, snow removal, etc totals.  The tenant has been very good at paying out the CAM reconciliation in the past so I don't anticipate a problem.  Should I?", "replies": [{"id": "d0apo4v", "text": "If it hasn't been an issue then I wouldn't worry about it. If you haven't been collecting it, it may have set a precedent and you may have issues.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "d0ae96e", "text": "It's very common for the tenant to reimburse management fees with multi-tenant properties. 4% seems reasonable, or even a little on the low side for the property you describe. \n\nIt doesn't matter if you have professional management or are managing it yourself, the tenant is still required to reimburse the landlord. Whether you own the property or not, you still want to be compensated (if possible) for managing the asset. As it sounds like you've discovered, the hours spent managing the property can add up. \n\nThe admin fee mentioned by another poster is different than a management fee. Some leases will include admin fees and some won't, it just depends on what was negotiated when the lease was signed.  The admin fee is essentially an additional fee for arranging/handling the work that needs to be done. \n\nFor example, you may have to redo the parking lot which would cost $x. If you had an admin fee (let's say 15%) , the tenant would reimburse you for $x+.15x. But this would have no impact on the ability to collect a management fee (obviously assuming the lease obligates the tenant to reimburse for the management fee).\n\n", "replies": [], "depth": 1}, {"id": "d0ak00z", "text": "&gt; The amount of time my mother and I have put into this can easily be converted to a reasonable hourly wage to meet this 4% figure, should we be asked to provide details of this specific charge.\n\nYou don't need to provide details or explanations if the management fee rate is stated in the lease. Just take the tenants annual rent + tenants annual cam and multiply by 4%. If they're single tenant building's it should be pretty easy. \n", "replies": [{"id": "d0axi0w", "text": "I'm not sure I follow.  Per the lease agreement in my original post, it's 4% of \"gross rents\".  Are you interpreting this as the sum of 4% of the total rent paid by the tenant *and* 4% of the CAM payments they've been making?  \n\nUnless \"gross rents\" is defined as including CAM, that seems to be above and beyond what is stated in the lease agreement.\n\nNot being pedantic, just want to make we recoup every dime we can.  Thanks for your help.", "replies": [{"id": "d0azl6g", "text": "&gt; total gross rents from the leasing of the property\nI'm interpreting 4% gross rents as 4% of the tenant's gross rents, Operating expense and real estate tax expense included. \nIt's not uncommon to include CAM as part of the gross rents. \n\nHowever, if your father didn't include it, I wouldn't either. I'd follow 'prior owner treatment' in that case. I'd also make every effort to obtain a copy of the 2014 settlement.\n\nI'd also inform the tenant that your father has passed ", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "d0aoa0e", "text": "I'm sorry to hear about your dad. I only hope you take up his vigor for commercial real estate and continue to manage this property in his stead.\n\nYes, charging \"yourself\" a management fee is very common. My clients are owner-operators, and I don't know a single one who doesn't bill a monthly management fee to their own buildings. There are reasons beyond the CAMs that make this a standard practice.\n\nIf you would like me to take a look at the 2015 CAM rec, send me a PM. I do them for a living.", "replies": [{"id": "d0axn06", "text": "Thank you.  I might take you up on that, if nothing else than to make sure the finished reconciliation letter we plan to send them looks professional; the tenant is a very large corporation so I don't want them to think we don't know what we're doing.  Fake it til you make it!", "replies": [], "depth": 2}], "depth": 1}]