CAM & Commercial Lease Glossary: 159 Terms Defined

The rate at which available commercial space is leased in a specific market over a given period. Absorption rate affects CAM because in buildings with slow absorption (high vacancy), the landlord may attempt to spread CAM costs over fewer tenants or apply gross-up provisions more aggressively.

A charge for the landlord's internal or third-party accounting costs associated with preparing CAM reconciliations and operating expense statements. Accounting fees are not universally permitted in CAM and may violate management fee caps.

An accounting method that records revenue when earned and expenses when incurred, regardless of when cash actually changes hands. Under accrual accounting, a landlord records a CAM expense when the service is performed, not when the vendor invoice is paid.

Modifications and ongoing maintenance required to meet the Americans with Disabilities Act (ADA) standards for accessibility in commercial buildings. ADA-related costs may include ramp installations, restroom modifications, signage updates, and parking space striping.

A charge separate from (or in addition to) the management fee, ostensibly for administrative overhead associated with managing the CAM cost pool. Administrative fees are sometimes used to circumvent management fee caps.

Fees billed to tenants who request heating or cooling outside the building's standard operating hours. After-hours HVAC is typically billed per hour at a rate set in the lease or building rules, and it can add thousands of dollars annually for tenants with non-standard schedules.

The spreading of a large capital cost over its useful life, recognizing the expense in installments rather than all at once. In CAM, some leases permit landlords to amortize capital expenditures and pass the annual amortized portion through to tenants.

A large, high-traffic tenant - typically a national chain or department store - that draws customers to a shopping center or commercial property. Anchor tenants often negotiate favorable lease terms, including exclusions from certain CAM charges.

A lease provision requiring disputes between landlord and tenant to be resolved through private arbitration rather than litigation in court. Arbitration decisions are typically binding and difficult to appeal.

The dollar value assigned to a property by the local tax assessor for the purpose of calculating property taxes. Assessed value may differ significantly from market value and is the base number that determines how much property tax the landlord owes and passes through to tenants.

A lease provision governing whether and how a tenant can transfer its lease rights and obligations to another party. Most commercial leases require landlord consent for assignments.

The contractual date by which a tenant must initiate a CAM audit after receiving the annual reconciliation statement. Missing the audit deadline can permanently bar a tenant from disputing that year's charges under a binding-and-conclusive clause.

A lease provision granting tenants the contractual right to inspect, review, and verify a landlord's CAM records and reconciliation calculations. Audit rights define the timeframe and procedure for initiating a CAM audit.

The fixed, contractually specified rent amount payable by the tenant before additional charges (CAM, taxes, insurance) are added. Base rent is the foundation of total occupancy cost calculations.

A reference year - typically the first year of the lease or year of building occupancy - used in gross leases to establish a baseline for operating expenses. Tenants pay only increases above the base year's actual costs in subsequent years.

A cap structure that limits total CAM charges to a fixed percentage or dollar amount above the base year expense level. The base year establishes the benchmark, and the cap constrains how far above that benchmark the landlord can charge in subsequent years.

A lease provision stating that the landlord's CAM reconciliation becomes final and binding if the tenant fails to dispute it within a specified window. This clause can permanently extinguish audit rights for tenants who miss the deadline.

The most extreme form of net lease, where the tenant assumes virtually all financial obligations for the property, including structural repairs, roof replacement, and capital expenditures, with no right to rent abatement under any circumstances.

A lease arrangement where a landlord or developer constructs a building to the tenant's specifications on the landlord's property, and the tenant leases the completed building for a long term.

The physical barrier between the interior and exterior of a building, including the roof, exterior walls, windows, doors, foundation, and waterproofing systems. Building envelope maintenance protects against water intrusion and energy loss, and some costs may appear in CAM.

A computerized control system that monitors and manages a building's mechanical and electrical equipment, including HVAC, lighting, fire systems, and security. BMS maintenance, software licensing, and monitoring fees are commonly passed through as CAM expenses.

The total annual cost of occupying commercial space, combining base rent with all additional charges billed by the landlord: CAM fees, property taxes, insurance, and any other pass-through costs. Building rent represents the true economic cost of a tenancy, as opposed to the base rent figure that appears on the lease headline.

The exterior signage, lobby directory, wayfinding signs, and tenant identification systems in a commercial building. Maintenance and updates to shared signage are commonly included in CAM, while individual tenant signage is typically the tenant's expense.

Charges passed through to tenants for the upkeep of shared building areas - parking lots, lobbies, landscaping, lighting, and other spaces accessible to all occupants. CAM is billed monthly as an estimate and reconciled annually against actual costs.

A lease provision limiting the annual increase in controllable CAM expenses to a specified percentage (commonly 3-5%) or a fixed dollar amount. CAM caps protect tenants from runaway expense escalation in multi-year leases.

CAM charges, also called CAM rent or CAM expenses, are the fees commercial tenants pay for their proportionate share of maintaining shared building areas and common systems. Charged separately from base rent in triple net and modified gross leases, CAM covers expenses such as parking lot upkeep, landscaping, lobby maintenance, common utilities, and building management. Landlords estimate monthly payments and reconcile actual costs annually.

The annual process by which a landlord compares estimated CAM payments collected from tenants during the year against actual CAM expenses incurred. Tenants receive a reconciliation statement showing whether they owe additional amounts or are due a refund.

CAM rent refers to the Common Area Maintenance component of a commercial lease payment, charged in addition to base rent. Tenants pay their pro-rata share of costs to maintain shared building areas: parking lots, lobbies, hallways, landscaping, and building systems. CAM rent varies each year based on actual landlord expenses and is reconciled against monthly estimates at year-end.

Specific expense categories that are explicitly carved out of a CAM cap, allowing the landlord to pass them through at actual cost with no ceiling. Common cap exclusions include property taxes, insurance premiums, utilities, and snow removal.

A cost that extends the useful life of a building asset, improves its value, or replaces a major component - such as a new roof, HVAC system, or parking lot repaving. Capital expenditures are typically excluded from CAM in most commercial leases.

A fund set aside by the landlord to cover future capital expenditures such as roof replacement, HVAC system upgrades, and parking lot resurfacing. Some landlords attempt to pass capital reserve contributions through as CAM expenses, which many leases prohibit.

The ratio of a property's net operating income (NOI) to its market value, expressed as a percentage. Cap rates are used to evaluate commercial real estate investments and indirectly affect tenants because landlords managing to a target cap rate may be incentivized to minimize reported expenses or maximize reported income.

A lease clause that allows unused cap room from one year to be carried forward and added to the cap limit in subsequent years. Similar to a cumulative cap, carryover provisions increase the effective cap in future years when prior years were below the cap.

An accounting method that records expenses when cash is actually paid and revenue when cash is received. Under cash basis accounting, a CAM reconciliation includes only expenses the landlord actually paid during the lease year, regardless of when the service was performed.

A lease clause that allows the landlord to recover capped amounts from prior years when actual expenses exceeded the cap. If expenses were held down by the cap in previous years, the catch-up provision lets the landlord recoup the difference in a later year when expenses fall below the cap.

A lease provision that ties a tenant's rent obligation or occupancy requirement to the presence of specific anchor tenants or a minimum occupancy level in the property. If the conditions are not met, the tenant may pay reduced rent or terminate the lease.

The cost of electricity, bulb replacements, and fixture maintenance for lighting in shared building spaces such as lobbies, hallways, stairwells, parking areas, and exterior walkways. This is one of the most common line items on a CAM reconciliation statement.

Shared restroom facilities in a commercial building that serve tenants and visitors who do not have private restrooms within their leased space. Cleaning, supplies, plumbing repairs, and fixture maintenance for common restrooms are standard CAM expenses.

Electricity, water, and gas consumed in shared building areas - lobbies, parking lot lighting, common restrooms, mechanical rooms - as distinct from tenant-specific utility usage. Common area utilities are typically an uncontrollable CAM expense.

A cap structure where the maximum allowable increase each year is calculated on the prior year's actual or capped amount rather than the original base year figure. Compounding caps allow expenses to grow exponentially over time, resulting in significantly higher charges than a simple (non-compounding) cap over a long lease term.

A legal doctrine that allows a tenant to terminate a lease when the landlord fails to maintain the premises or common areas to the point where the space becomes unusable for its intended purpose. The tenant must actually vacate to claim constructive eviction.

A cap that limits annual increases only on expenses the landlord can control, such as maintenance, janitorial, and management fees, while excluding uncontrollable costs like property taxes and insurance. This is the most common CAM cap structure in commercial leases.

Operating expenses that are within the landlord's management control and judgment, such as landscaping, janitorial, security, and management fees. CAM caps typically apply only to controllable expenses, limiting annual increases.

The total annual CAM expense divided by the building's rentable square footage, producing a per-unit rate used to benchmark expenses and calculate individual tenant charges. This metric is the easiest way to compare your building's costs against market averages.

An implied or express obligation in commercial leases requiring both landlord and tenant to act honestly and fairly in performing their contractual duties, without attempting to undermine the other party's rights or benefits under the lease.

A rent or CAM escalation mechanism tied to the Consumer Price Index (CPI), intended to adjust costs in line with general inflation. CPI-linked provisions shift inflation risk to tenants.

A long-term net lease, typically 10 to 25 years, to a financially strong tenant (the "credit tenant") whose creditworthiness is sufficient to support real estate financing on its own. Credit tenants are usually investment-grade corporations: national retailers, pharmacy chains, banks, government agencies, and healthcare systems.

A CAM cap structure where unused cap capacity from low-expense years carries forward, allowing the landlord to exceed the single-year cap percentage in later years by "catching up" on the accumulated unused increases. This is less protective than a non-cumulative cap.

The ratio of a property's net operating income (NOI) to its total annual debt service (principal + interest). A DSCR above 1.0 means the property generates enough income to cover its loan payments. Lenders typically require a minimum DSCR of 1.20–1.35 for commercial real estate loans.

The practice of passing an insurance policy deductible to tenants as an operating expense after a claim. When a covered loss occurs and the landlord pays the deductible before insurance kicks in, that cost may be charged to tenants as part of CAM.

An accounting method that spreads the cost of a long-lived asset over its useful life. Depreciation is almost universally excluded from commercial lease CAM definitions - tenants pay for actual expenses, not accounting allocations.

A table or document showing how the cost of a capital asset is allocated as an expense over its useful life. In CAM, depreciation schedules determine the annual amount of amortized capital expenditures that landlords can pass through to tenants.

A legal doctrine that tolls (delays) the start of the statute of limitations until the injured party knew or reasonably should have known about the injury. In CAM disputes, the discovery rule may extend the lookback period when overcharges were concealed.

A formal written notice sent by a tenant to a landlord specifying identified CAM overcharges, the legal and contractual basis for the dispute, and the amount requested for reimbursement. A dispute letter draft is typically the first step before legal action.

A CAM cap expressed as a maximum dollar amount per square foot, such as "CAM shall not exceed $8.50 per SF." Dollar caps provide absolute cost certainty because the maximum charge is a fixed number regardless of actual expenses.

A lease structure where the tenant pays base rent plus property taxes and property insurance premiums. The landlord retains responsibility for structural maintenance and common area upkeep.

Service and repair costs for elevators and escalators in multi-story buildings, included in CAM as a building systems operating expense. Elevator modernization or full replacement is a capital expenditure.

A backup power system that provides electricity to critical building systems (elevators, fire pumps, emergency lighting, life safety systems) during utility power outages. Generator maintenance and fuel costs are common CAM expenses, while generator installation or replacement is a capital expenditure.

The contractual method for increasing a tenant's CAM or rent charges year over year. Common escalation formulas include fixed percentage increases, CPI-based adjustments, and actual cost pass-throughs. The formula dictates how much more you pay each year.

A signed statement by a tenant confirming the current terms of the lease, including rent amounts, security deposits, and whether the landlord is in default. Landlords typically request estoppel certificates when selling or refinancing the property.

A lease provision that prohibits the landlord from leasing other spaces in the property to tenants who compete directly with your business. It protects your ability to operate without direct competition within the same building or shopping center.

The total collection of operating costs a landlord groups together before allocating shares to individual tenants. The composition of the expense pool directly determines your CAM bill, and disputes frequently center on which costs belong in the pool and which do not.

A dollar threshold - typically set at the base year's per-square-foot operating cost - above which the tenant pays their share of operating expense increases. The landlord covers all costs up to the expense stop; costs above it are passed through to tenants.

The cost of painting, pressure washing, and maintaining the exterior surfaces of a commercial building, including walls, trim, railings, and decorative elements. Exterior painting is typically performed every 5 to 10 years and may appear as a CAM charge.

The cost of inspecting, testing, and maintaining fire alarm systems, sprinkler systems, emergency lighting, and other life safety equipment as required by local fire codes. These costs are commonly passed through to tenants as part of CAM.

The network of sprinkler heads, risers, control valves, fire pumps, and alarm connections designed to detect and suppress fires in a commercial building. Routine testing and maintenance are CAM expenses, while system installations and major upgrades are capital expenditures.

A CAM structure where the tenant pays a predetermined, fixed amount for common area maintenance that does not vary based on actual expenses. Fixed CAM eliminates reconciliation uncertainty for tenants.

A lease clause that excuses one or both parties from performing their obligations when extraordinary events beyond their control, such as natural disasters, pandemics, or government actions, make performance impossible or impractical.

A lease structure, common in office buildings, where the landlord includes most or all operating expenses in the base rent. The tenant pays a single, all-inclusive rent amount with limited or no separate expense pass-throughs.

The standard framework of accounting rules, conventions, and practices used in the United States. Some commercial leases require landlords to prepare CAM reconciliations in accordance with GAAP, which governs how expenses are recognized, classified, and reported.

Insurance that covers bodily injury, property damage, and personal injury claims arising from building operations and common area use. General liability insurance premiums are routinely passed through to tenants as an operating expense.

A lease provision that permits a tenant to cease operations (go dark) at the leased location while continuing to pay rent and fulfill other lease obligations.

The total floor area of a building available for tenant occupancy and the conduct of business, typically used as the denominator for pro-rata CAM allocations. GLA excludes common areas, mechanical rooms, and other non-leasable spaces.

A lease structure in which the tenant pays a fixed rent and the landlord covers all (or most) operating expenses, including taxes, insurance, and maintenance. Gross leases eliminate most variable expense exposure for tenants but typically have higher base rents.

A lease mechanism that adjusts variable operating expenses upward to reflect what they would have been if the building were fully occupied (typically 95%). Gross-ups prevent inflated costs when occupancy is low but also ensure tenants pay their true share.

The multiplier applied to variable operating expenses to normalize them to a fully-occupied building level. It is calculated as the target occupancy percentage divided by the actual occupancy percentage, and is used in CAM reconciliations to prevent tenants from benefiting from artificially low costs during vacancy periods.

A long-term lease (typically 50 to 99 years) where the tenant leases only the land and constructs or maintains the building at its own expense. At lease expiration, the building usually reverts to the landowner.

A tenant who remains in occupancy after their lease term expires without executing a new lease. Holdover periods are typically governed by the original lease or state law and can expose both parties to significant financial risk.

Heating, ventilation, and air conditioning system upkeep - filter changes, seasonal servicing, repairs - included in CAM as an operating expense. HVAC system replacement is a capital expenditure.

A lease provision where one party agrees to compensate the other for losses, damages, or liabilities arising from specified events, such as injuries on the premises or breach of the lease.

A hybrid lease structure common in industrial and warehouse properties where the tenant pays a base rent that includes some operating expenses, with specific categories (typically property taxes, insurance, and utilities) passed through separately.

The method by which a building's total insurance premium is divided among tenants. Allocation can be based on rentable square footage, insured value of tenant improvements, risk profile, or a combination. Incorrect allocation is a common source of CAM overcharges.

The annual process of reconciling estimated insurance pass-through payments with actual insurance premiums incurred. Insurance is typically an uncontrollable expense passed through at actual cost in NNN leases.

Cleaning and sanitation services for common areas - lobbies, restrooms, hallways - typically included in the CAM cost pool. Janitorial costs are controllable expenses subject to CAM caps in most leases.

A lease provision allowing the tenant (or sometimes the landlord) to terminate the lease early if certain performance benchmarks, such as minimum sales thresholds, are not met within a specified time frame.

Exterior grounds maintenance including planting, irrigation, mowing, and seasonal care - typically included in the CAM cost pool as a controllable expense. Landscaping costs are capped in most leases with controllable CAM caps.

A concise summary document extracting the key financial and operational terms from a commercial lease - rent, term, CAM caps, audit rights, renewal options, and important dates. A lease abstract is the starting point for any CAM audit.

The date a tenant's lease term officially begins and, absent a free-rent period, when rent and CAM obligations commence. The commencement date determines the start of all lease obligation periods including the base year.

The 12-month period used as the accounting basis for CAM reconciliations, which may or may not align with the calendar year. The lease year defines when annual reconciliation obligations begin and end.

A tenant's contractual right to occupy and use a property for the duration of the lease term. The leasehold is a possessory interest; the tenant controls the space without owning the underlying real estate. When the lease ends, the leasehold expires and the property reverts to the landlord.

A preliminary, non-binding agreement outlining the basic terms of a proposed commercial lease before formal lease drafting begins. The LOI establishes negotiating parameters but is not a binding contract.

The multiplier applied to usable square footage to produce rentable square footage. A load factor of 1.15 means 15% of common area costs are allocated to your space on top of your actual footprint. Higher load factors mean you pay for more shared space.

The cost of maintaining shared loading dock areas, including dock leveler repairs, bumper replacement, overhead door servicing, lighting, and pavement upkeep. Loading dock maintenance is a CAM expense in buildings where docks serve multiple tenants.

The number of prior lease years a tenant can audit or dispute under their lease terms and applicable statute of limitations. The lookback period determines how far back an overcharge recovery can extend.

A fee charged by the landlord or property manager for administering the property and CAM cost pool, typically calculated as a percentage of gross revenues or total operating expenses. Management fees are frequently capped in commercial leases.

A voluntary or lease-required dispute resolution process where a neutral third party helps the landlord and tenant negotiate a settlement. Unlike arbitration, the mediator does not impose a decision.

The tax rate applied to a property's assessed value to determine the annual property tax bill. One mill equals one dollar of tax per $1,000 of assessed value. Understanding millage rates helps tenants verify that the tax amount passed through in CAM is calculated correctly.

A hybrid lease structure between a full gross lease and a NNN lease, where specific operating expenses are negotiated between landlord and tenant. Some costs are included in base rent; others are billed separately as pass-throughs.

The actual average rent a tenant pays per year after factoring in concessions like free rent periods, tenant improvement allowances, and move-in incentives. Net effective rent reveals the true cost of a lease, which is often lower than the stated base rent.

A lease structure where the tenant pays base rent plus some portion of property operating expenses. The term "net" indicates expenses are passed through to the tenant on top of (net of) the base rent.

A property's annual gross revenue minus operating expenses, before debt service and income taxes. NOI is the primary metric used to value commercial real estate; a higher NOI means a higher property value. Because CAM reimbursements from tenants offset operating expenses, landlords have a financial incentive to maximize CAM pass-throughs.

A CAM cap that limits expense increases independently each year, with no carryover of unused capacity from low-expense years. This is the most tenant-friendly cap structure because the landlord cannot "catch up" by passing through a large increase after years of being under the cap.

The percentage of a building's total rentable area that is currently leased and occupied. Occupancy rate matters for CAM because it affects how expenses are distributed, whether gross-up provisions apply, and whether vacant space costs are shifted to existing tenants.

The total annual costs of operating and maintaining a commercial property, including CAM, real estate taxes, insurance, and management fees. In NNN leases, operating expenses are largely passed through to tenants; in gross leases, landlords absorb most costs above the base year.

Ongoing upkeep of parking areas - sweeping, striping, pothole repair, lighting maintenance, and snow removal - included in the CAM pool for properties with shared parking. Large periodic repaving projects may be capital expenditures.

A multi-level parking garage or structured parking facility that serves a commercial building's tenants and visitors. Maintenance costs for shared parking structures, including cleaning, lighting, striping, and minor concrete repairs, are commonly included in CAM.

A CAM cap expressed as a maximum percentage increase per year, such as "CAM shall not increase more than 5% annually." Percentage caps are the most common cap format and can be compounding or non-compounding, cumulative or non-cumulative.

A lease structure where the tenant pays a base rent plus a percentage of gross sales above a specified breakpoint. Common in retail properties, particularly shopping centers and malls.

Regular extermination and pest prevention services for common areas of a commercial building, including treatment for rodents, insects, and other pests. Pest control for individual tenant spaces is typically billed directly to the tenant, while common area pest control is part of CAM.

The percentage of total CAM costs allocated to a specific tenant based on the ratio of their leased square footage to the total leasable area of the building or property. A pro-rata share error is one of the most common CAM overcharges.

Insurance that covers the building structure and landlord-owned improvements against damage from fire, storms, vandalism, and other covered perils. Property insurance premiums are a standard operating expense passed through to tenants in most commercial leases.

The year-over-year increase in property taxes passed through to tenants as part of CAM or as a separate line item. Property tax escalation is typically excluded from CAM caps, making it one of the largest uncontrolled costs in a commercial lease.

The percentage of total building operating expenses allocated to a specific tenant, calculated by dividing the tenant's rentable square footage by the building's total rentable square footage. This percentage determines what fraction of every CAM dollar you owe.

Charged, credited, or allocated in proportion to a partial period. In commercial real estate, rent and CAM are prorated when the lease begins or ends mid-month; the tenant pays only for the days they occupy the space, not the full month.

A covenant in most commercial leases guaranteeing the tenant the right to use the leased premises without substantial interference from the landlord or third parties claiming through the landlord.

A lease clause that prohibits a tenant from opening another location of the same business within a specified distance of the leased property. Landlords use radius restrictions to protect percentage rent revenue.

Property taxes assessed by local governments on commercial real estate, typically passed through to tenants in NNN leases and as expense escalations in gross leases. Tax reconciliation errors are common CAM overcharges.

A lease provision allowing the landlord to take back (recapture) all or part of the leased space under specified circumstances, such as when the tenant requests to assign or sublease.

The difference between what a tenant paid in estimated monthly CAM installments during the year and the actual expenses allocated to that tenant at year-end. A positive variance means you owe additional money; a negative variance means you are owed a credit.

A lease provision giving the tenant the right to extend the lease for one or more additional terms at a predetermined or market-adjusted rent, provided the tenant exercises the option within the required notice period.

A period during which the tenant pays reduced or no rent, typically granted at lease commencement as an incentive or following a casualty, landlord default, or force majeure event. Most free rent provisions abate base rent only, not CAM or tax pass-throughs, unless the lease explicitly includes all occupancy costs in the abatement.

A contractual provision increasing rent at specified intervals - fixed annual increases, CPI adjustments, or operating expense step-ups. Escalation provisions determine how fast a tenant's total rent grows over the lease term.

The total floor area a tenant is charged for, combining their private usable space with a proportional share of common areas like lobbies, hallways, and restrooms. Rentable square footage is always larger than usable square footage and directly determines how much you pay in rent and CAM charges.

The current cost to replace a building component or system with a functionally equivalent one at today's prices. Replacement cost is used to determine the amortization base for capital expenditures passed through CAM and to evaluate insurance coverage adequacy.

Money collected from tenants and held by the landlord to fund future capital repairs and replacements. Unlike actual operating expenses, reserves are not incurred costs - contributions to reserves are generally excluded from CAM in most commercial leases.

A lease provision giving the tenant the right to match the terms of any third-party offer before the landlord can lease adjacent or additional space to someone else.

Costs associated with maintaining and fixing a building's roofing system. Routine repairs are operating expenses; full roof replacement is a capital expenditure and should not be passed through as an immediate CAM charge.

The process of maintaining, tracking, and enforcing warranty coverage on a commercial building's roofing system. Roof warranties require periodic inspections and specific maintenance to remain valid. Administration costs may appear in CAM, but warranty-covered repairs should not.

A transaction where a property owner sells its building to a buyer and simultaneously leases it back, converting from owner to tenant. The seller gains immediate capital while retaining occupancy.

Costs for on-site security personnel, cameras, access control systems, and monitoring services for common areas. Security is a controllable operating expense included in most CAM cost pools.

A lease provision allowing a tenant to cure a landlord's default (such as failure to maintain common areas) at the landlord's expense after providing written notice and a reasonable cure period.

The cost of clearing snow and treating ice on parking lots, sidewalks, building entrances, and other common areas during winter months. Snow removal is a seasonal CAM expense that can vary significantly from year to year depending on weather.

A one-time or periodic governmental levy imposed on property for specific infrastructure improvements that differs from regular ad valorem property taxes. Pass-through rights for special assessments vary by lease.

The maximum period during which a legal claim can be filed after a cause of action arises. For CAM overcharge disputes, the statute of limitations for written contract claims typically ranges from 3 to 6 years depending on the state.

The systems and practices used to manage rainwater runoff on a commercial property, including storm drains, retention ponds, bioswales, and drainage infrastructure. Stormwater management fees and maintenance costs may be passed through as CAM expenses.

An arrangement where a tenant leases part or all of its space to a third party (subtenant) while remaining responsible under the original lease with the landlord.

Space within a commercial property that the original tenant (sublessor) rents to a third party (sublessee) under a separate agreement while maintaining obligations under the original lease.

An agreement where a tenant's lease rights are made subordinate (junior) to a lender's mortgage on the property. This means the lender's claim takes priority if the landlord defaults on the loan.

A lease provision requiring the tenant to return the premises to a specified condition at the end of the lease term, often including removal of tenant improvements and restoration to the original or "shell" condition.

A financing structure designed to look like a lease for accounting purposes (keeping the property off the tenant's balance sheet) while being treated as a loan for tax purposes (allowing the tenant to deduct interest and depreciation).

A legal or administrative proceeding challenging a property's assessed value with the goal of reducing property taxes. In NNN leases, tenants may share in tax appeal costs but should also receive the resulting savings.

A formal challenge to a property's assessed value filed with the local tax authority, seeking to reduce the assessed value and consequently lower the property tax bill. Successful tax protests benefit tenants by reducing the tax component of their CAM charges.

A formal revaluation of a property's assessed value by the local tax authority, often triggered by a sale, major renovation, or scheduled reassessment cycle. Reassessments can cause significant jumps in property taxes passed through to tenants.

A landlord contribution toward the cost of tenant-specific buildout or improvements within the leased space. TIAs are capital expenses borne by the landlord and should never appear in the CAM expense pool.

The cost of collecting, hauling, and disposing of waste generated in common areas of a commercial building, including dumpster rental, scheduled pickups, and recycling services. Trash removal is a standard CAM line item in most commercial leases.

A lease structure in which the tenant pays base rent plus three additional cost categories: real estate taxes, building insurance, and CAM/operating expenses. In a true NNN lease, tenants bear nearly all property costs beyond mortgage debt service.

The year-end calculation that compares estimated CAM payments collected from tenants during the year against actual expenses incurred. If estimates exceeded actuals, tenants receive a credit. If actuals exceeded estimates, tenants owe an additional payment. The true-up is the core of the annual CAM reconciliation process.

An additional liability insurance policy that provides coverage above and beyond the limits of the building's primary general liability and property insurance policies. Landlords often pass through umbrella insurance premiums as part of CAM or insurance charges.

Operating expenses outside the landlord's management control - typically taxes, insurance, and utilities - that are excluded from CAM cap limitations and can be passed through in full regardless of annual increase amount.

The actual floor area exclusively occupied by a tenant, measured wall to wall within the demised premises. Usable square footage excludes shared building spaces and is always smaller than the rentable square footage figure used for billing.

The expected service life of a building component or asset, used to determine depreciation and amortization schedules. In CAM disputes, artificially short useful lives inflate amortized capital expense pass-throughs.

The percentage of a property's rentable space that is unoccupied at any given time. In CAM allocation, how vacancy is handled - whether vacant space bears its own share or costs are redistributed to occupied tenants - has significant financial impact.

A CAM structure where tenant payments fluctuate based on actual operating expenses incurred each year, with an annual reconciliation process to true up estimated payments to actual costs.

The cost of water supply and sewage disposal for common areas of a commercial building, including irrigation for landscaping, restroom facilities in shared spaces, cooling tower makeup water, and fire suppression system testing. Water and sewer charges are a standard CAM line item.

A calculation method that accounts for varying time periods or proportions when computing a tenant's share of expenses. Weighted averages are used when occupancy, square footage, or expense rates change mid-year, ensuring costs are allocated based on actual time or proportion rather than simple arithmetic averages.

A metric representing the average time remaining across all leases in a property or portfolio, weighted by each lease's contribution to total income (or total area). A high WALE indicates stable, long-term income; a low WALE signals near-term rollover risk. Commercial tenants renewing or signing new leases affect the building's WALE.

The cost of cleaning exterior and common area interior windows of a commercial building. Window cleaning for common areas (lobby glass, entrance doors, atrium windows) is typically included in CAM, while interior cleaning of tenant-specific windows may be the tenant's responsibility.

Insurance coverage that pays for employee injuries occurring on the job, including medical expenses and lost wages. In commercial real estate, landlords sometimes pass building staff workers compensation premiums through as a CAM expense.

A CAM cap calculated as the maximum permissible increase in controllable expenses from one year to the next, expressed as a percentage. Also called an annual escalation cap.