Can my landlord mark up the electricity rate for common area lighting?

No. Utility pass-throughs must reflect actual cost to the landlord without markup. If your lease is silent on this, the prevailing rule is that landlords cannot profit from utility resale. Request copies of the actual utility bills to verify the per-kWh rate charged matches what the landlord paid.

How is common area lighting separated from my suite's electricity?

Through sub-metering. Each tenant suite and each common area circuit should be sub-metered so electricity consumption is measured independently. Without sub-meters, landlords estimate allocations — and those estimates frequently over-allocate costs to tenants. Negotiate sub-metering requirements into your lease.

Can my landlord mark up the electricity rate for common area lighting?

No. Utility pass-throughs must reflect actual cost to the landlord without markup. If your lease is silent on this, the prevailing rule is that landlords cannot profit from utility resale. Request copies of the actual utility bills to verify the per-kWh rate charged matches what the landlord paid.

How is common area lighting separated from my suite's electricity?

Through sub-metering. Each tenant suite and each common area circuit should be sub-metered so electricity consumption is measured independently. Without sub-meters, landlords estimate allocations — and those estimates frequently over-allocate costs to tenants. Negotiate sub-metering requirements into your lease.

Building Common Area Lighting: CAM Line Item Audit Guide

Electricity and maintenance for interior common area lighting including lobbies, corridors, stairwells, and shared restrooms.

Recoverability & Controllability by Lease Type

Lease Type	Recoverable?	Controllable?
NNN	Yes	Yes
Modified Gross	Yes	Yes
Full-Service Gross	No	Yes

CapEx Risk: This line item is commonly used to disguise capital expenditures as operating expenses. Verify all invoices against GAAP standards.

Approximate budget share: 1-3% of total CAM pool.

Common Abuse Patterns

Landlords bundle tenant suite electricity with common area electricity or mark up utility rates. Full lighting system replacements are passed through as maintenance.

Red Flags to Watch

No sub-metering separating tenant space from common area electricity
A markup percentage applied to utility pass-throughs
"Lighting system replacement" or "electrical panel upgrade" on invoices
Common area electricity costs increase despite lower occupancy

CapEx Risk Alert

This line item is commonly used to disguise capital expenditures as operating expenses. Capital expenditures must be excluded from CAM or amortized over their useful life per GAAP. If you see unusually high or one-time charges in this category, request all invoices and scope-of-work documentation before paying.

Your Right to Dispute

Demand sub-meter data proving electricity charges are limited to actual common area consumption. Prohibit markups on utility pass-throughs. Challenge any electrical panel or system upgrade as a capital expenditure requiring amortization.

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Related Resources

GlossaryCAM Glossary GlossaryControllable Expenses ResourcesCAM Audit by State ToolsFree CAM Audit Tools

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This page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.

Lease Type

Recoverable?

Controllable?

NNN

Yes

Modified Gross

Yes

Full-Service Gross

Yes

CapEx Risk Alert