Glossary
Caps & Limits
Controllable Expenses
Operating expenses that are within the landlord's management control, such as landscaping, janitorial, security, and management fees. CAM caps typically apply only to controllable expenses, limiting annual increases.
Firm impact
When the lease has a CAM cap, the controllable vs. uncontrollable classification determines which expenses the cap applies to. Landlords sometimes reclassify controllable items as uncontrollable to inflate the uncapped portion. Your firm's classification review is a high-value component of the audit.
How this gets abused
A landlord has a 5% controllable CAM cap. Landscaping costs rose 12% due to a new contractor. Rather than absorbing the overage, the landlord reclassifies landscaping as a 'utility-adjacent service' and bills the full 12% increase, bypassing the cap entirely.
Practitioner note
The lease defines controllable expenses by either inclusion or exclusion. Most leases use the exclusion approach: all CAM expenses except taxes, insurance, and utilities are controllable. When a landlord reclassifies expenses mid-term, request the specific lease language authorizing the reclassification.
FAQ
Questions about controllable expenses
What qualifies as a controllable expense in most leases?
Typically: janitorial, landscaping, security, management fees, trash removal, parking lot maintenance. The exact definition is in the lease. Do not assume industry norms apply.
Does CAMAudit detect when controllable expenses exceed the cap?
CAMAudit's controllable expense limit check checks whether controllable operating expenses grew beyond the cap rate the lease specifies. It accounts for whether the cap is cumulative or non-cumulative and calculates the overage in dollars.
You know the term. Now check the math.
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