What is Operating Expense Exclusions?

Definition

Operating expense exclusions are lease provisions specifying categories of expenses that tenants are not obligated to reimburse as part of CAM. Common exclusions include capital improvements, leasing commissions, management fees above a capped percentage, marketing costs, and expenses benefiting only specific tenants. Including excluded expenses in CAM pools — whether through intentional overcharging or GL miscoding — is the most frequently disputed billing error uncovered in tenant audits. Landlords must maintain accurate GL code mapping and regularly review expense classifications to ensure excluded costs are not inadvertently passed through to tenants.