What is Non-Cumulative Cap?
A CAM cap structure where unused cap allowance is forfeited each year, resetting the baseline and limiting future increases to the stated percentage.
Definition
A non-cumulative cap is a CAM cap structure where unused cap allowance from years with below-cap expense growth is forfeited — it does not carry forward to future years. Each year stands alone: the maximum allowable increase is calculated only as the cap percentage applied to the prior year's actual charges (or capped amount). Non-cumulative caps strongly favor landlords in most scenarios because a single year of low expenses resets the effective baseline downward, permanently limiting the dollar amount of future increases. However, non-cumulative caps can create a compounding disadvantage for landlords if expenses spike after several years of low growth. Many tenant representatives negotiate for cumulative caps specifically because they understand the long-term financial advantage non-cumulative caps provide to landlords.
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