Glossary
Caps & Limits
CAM Cap
A lease provision limiting the annual increase in controllable CAM expenses to a specified percentage (commonly 3 to 5%) or a fixed dollar amount. CAM caps protect tenants from runaway expense escalation in multi-year leases.
Firm impact
CAM cap violations are high-confidence findings because the math is deterministic: either the increase exceeded the cap or it didn't. Firms can present these findings with precision and they are difficult for landlords to contest. They are often the largest-dollar item on a reconciliation audit.
How this gets abused
A lease caps controllable CAM at 5% annual increases. The landlord reclassifies 40% of controllable expenses as 'utilities' (uncontrollable) and applies no cap to those charges. This strips the cap's protection from nearly half the CAM pool.
Practitioner note
Verify whether the cap is cumulative or non-cumulative. A non-cumulative 5% cap resets each year with no carryforward of unused ceiling. A cumulative cap compounds into future years. The difference can be worth tens of thousands in multi-year engagements.
FAQ
Questions about cam cap
What expenses are excluded from a CAM cap?
CAM caps typically exclude insurance premiums, real estate taxes, utilities, and other 'uncontrollable' expenses. The specific exclusions depend on the lease language. Always check the cap definition before running the calculation.
How can I check if the landlord exceeded the CAM cap?
Compare the lease cap percentage against the year-over-year increase in controllable CAM expenses on the reconciliation statement. Any increase above the cap limit should be credited back. CAMAudit's annual increase cap check runs this check automatically, flagging the exact dollar overcharge.
You know the term. Now check the math.
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