This concept is best understood if the property has

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ownership with none of the advantages.  This concept is best understood if the property has only  one tenant.  But, often the tenant’s space is part of a larger complex and some of the expenses  need to be shared by all the tenants.  In this situation, the landlord pays for these expense items as  they occur but each tenant pays in advance for his estimated share of the expenses.  Thus the  landlord estimates the cost of taxes and spreads the amount bases upon the percentage of the  property each tenant occupies.   In the same way he spreads the cost of insurance among the  tenants.  
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The landlord also will provide some of the services needed for the common area and will  assess a common area maintenance charge (CAM) to the tenants.  These CAM charges are for the  expenses not specific to a tenant.  For example, the electricity charges for the parking lot lights is  paid by the landlord under CAM, but, each tenant would have a separate bill for the electricity  used in his space.  The landlord will estimate the charges for taxes, insurance and CAM at the  beginning of the lease and will bill the tenant for 1/12th of these estimated charges with the  monthly rent.  At the end of each year the landlord will compare the actual expenses with the 
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  • Spring '11
  • Abner
  • tenant, landlord, triple net lease, insurance  premiums

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