What is CAM Cap?
A lease provision limiting the annual increase in controllable operating expenses a landlord can pass through to tenants, expressed as a percentage.
Definition
A CAM cap limits the annual increase in controllable operating expenses a landlord can pass through to tenants, expressed as a percentage of the prior year's charges. Caps may be cumulative (unused cap allowance carries forward to future years) or non-cumulative (unused cap is forfeited each year). Non-cumulative caps strongly favor landlords because a single year of low expenses does not create a larger allowance in subsequent years. Failing to apply caps correctly — or misclassifying non-controllable expenses as controllable to circumvent the cap — is a common dispute trigger in tenant audits. Before running reconciliation, property managers should confirm the exact cap structure (percentage, cumulative vs. non-cumulative, and which expense categories it applies to) directly from the lease document — <a href="https://www.lextract.io" target="_blank" rel="noopener noreferrer">lextract.io</a> extracts CAM cap provisions as structured fields from commercial lease PDFs.
See how compounding vs. non-compounding caps affect your costs over time.
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