What is Controllable vs Non-Controllable Expenses?

Definition

Controllable expenses are operating costs the landlord can influence, such as management fees, janitorial services, landscaping, and security. Non-controllable expenses are costs outside the landlord's direct control, including property taxes, insurance premiums, and utility rates set by providers. CAM cap provisions typically apply only to controllable expenses, making the classification financially significant. Misclassifying expenses between these categories can invalidate cap calculations and expose landlords to audit findings. The specific categorization of each expense as controllable or non-controllable should be defined in the lease, though many leases leave this classification ambiguous.