Can fixed expenses ever be grossed up?

No. Gross-up applies only to variable expenses that genuinely fluctuate with occupancy: janitorial, common area utilities, trash removal, landscaping. Insurance, property taxes, and fixed-rate management fees are excluded. Grossing up fixed expenses is a direct lease violation.

Does CAMAudit flag improper gross-up calculations?

CAMAudit's occupancy normalization check identifies when landlords have applied the gross-up formula to fixed expenses. The rule calculates the exact dollar overcharge resulting from improperly grossed-up fixed costs, giving your firm a specific finding to present to the client.

Calculations & Formulas

Gross-Up

Last updated: May 2026

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 are designed to ensure each tenant pays their true share of common costs.

Firm impact

Gross-up violations are math-intensive and hard to catch without tooling. The firm that can quickly verify which expenses qualify for gross-up (variable only) versus which don't (fixed: insurance, taxes, management fees) can produce a defensible finding most tenants review committees have never seen.

How this gets abused

A landlord grosses up insurance premiums, a fixed expense that does not vary with occupancy. At 70% occupancy, the landlord inflates the $200,000 insurance bill to $285,714. Tenants pay 43% more than the actual insurance cost with no contractual basis.

Practitioner note

Always pull the gross-up clause and request the landlord's expense categorization (variable vs. fixed) before running the math. The most common violation is applying the gross-up factor to the entire operating expense pool rather than only to variable expense categories.