Chapter 5 · CAM exclusions

CAM exclusions tenants often look for

Guide · August 2026 · Not legal or accounting advice

This is a checklist of operating-expense and CAM items tenants commonly mark on a year-end statement. It is not a universal legal list. It is not “standard CAM law.” Your lease’s definitions, inclusions, and exclusions control.

The lease wins

If a cost is allowed by the lease, it can be in the pool even if it appears below. If it is excluded, it should not be passed through even if it appears on the landlord’s ledger. Office, retail, and industrial forms differ. States differ. A cost that is “commonly challenged” can still be recoverable. CAM True-Up is not a law firm, CPA firm, or CAM auditor. Use this list to read a statement and decide what to ask about. Confirm every item against the lease.

There is no standard CAM percentage and no typical recovery rate on this page. For how dollars that do belong in the pool then get allocated, see CAM reconciliation and operating-expense pass-throughs.

How to mark a statement

Start from the definition of Operating Expenses or CAM, then the exclusions exhibit, then the statement. Mark anything on the statement that looks like a heading below. Ask for the general ledger and a sample invoice. You do not need to win the argument in the first hour. You need a dated list of questioned lines and a request for backup inside the objection window.

Under each item: why tenants look at it, then what to request.

Capital improvements versus permitted amortized capital

New roofs, HVAC replacements, parking-lot reconstruction, and other items that extend useful life are often capitalized rather than expensed in a single CAM year. Some leases allow a pass-through of amortized capital that reduces operating cost (for example a more efficient chiller) or that is required by law after the lease date. Some forbid capital entirely. The question is what your lease says, not whether the invoice is large.

Why tenants look: a capital item expensed in one year moves a long-lived asset onto the tenants who happened to occupy that year. Permitted amortization, if the lease allows it, spreads the same cost. An ordinary repair (a section of membrane, a compressor, a catch-basin rebuild) can look like capital on a vendor invoice and still be recoverable as maintenance. The category is not the vendor’s job name.

What to request: the invoice, the useful life the landlord used, the start date, the clause that permits amortization, and whether any incentive or warranty reduced the basis.

Depreciation versus permitted amortization

Depreciation of the landlord’s building, and amortization of organization or acquisition costs, are frequently excluded. Amortization of a permitted capital project is a different sentence in many leases. Do not collapse the two.

Why tenants look: depreciation is the owner’s recovery of basis in the asset they bought to rent. Passing it through would make tenants buy the building a second time, on top of base rent. Permitted project amortization is a specific exception, usually limited to listed categories and a listed period. A GL line named “depreciation” that is actually the permitted schedule should be reconcilable to that schedule. A GL line that is book depreciation of the shell should not be in the pool if the lease excludes it.

What to request: the asset register or amortization schedule behind the line, and the lease clause cited for each item on it.

Landlord corporate overhead versus on-site

Off-site executive salaries, home-office rent, regional accounting, and corporate overhead are commonly carved out, especially when the lease already allows a stated administrative or management fee. On-site manager payroll may be treated differently.

Why tenants look: the fee is often the bargained substitute for off-site overhead. Paying the fee and the regional VP is paying twice for supervision. On-site time that is actually spent on this building is a closer case and is often allowed. Time that is allocated from a shared regional office wants an allocation method.

What to request: payroll by person and location, the allocation method for shared staff, and the fee calculation so you can see whether overhead is already in the fee.

Vacant space, leasing commissions, TIs for others

Leasing commissions, tenant-improvement allowances for other tenants, and the cost of heating, lighting, or finishing vacant bays are often assigned to the landlord. Some leases also keep vacant-space CAM out of the denominator or the pool. Occupancy used for a gross-up is related; see the reconciliation page.

Why tenants look: commissions and TIs are the cost of acquiring a new rent stream for the owner. Vacant-bay utilities are the cost of empty space. Remaining tenants did not lease that space. A stipulated denominator that keeps vacant SF in the share is a different protection (it stops your percentage from rising); it does not, by itself, put the vacant bay’s finish work into the pool.

What to request: commission invoices, TI draws, vacant-space utility meters or allocations, and the rent roll that shows what was vacant.

Redevelopment and unused amenities

Signature fountains, unused amenity build-outs, redevelopment soft costs, and a food-hall or fitness build that is not part of the common area you leased are items tenants often argue are not ordinary maintenance.

Why tenants look: redevelopment is the owner changing the asset. Ordinary CAM is keeping the asset that was leased in ordinary condition. “Luxury” is not a legal category. The lease’s ordinary-and-necessary language, capital language, and any express amenity clause are. An amenity that is closed, or that opened after your lease and is not in your grant, is a sharper question than a courtyard the lease already described.

What to request: the project budget, what is open and usable, and the clause that treats the cost as operating rather than capital.

Costs recovered by insurance, warranty, or a single tenant

Insurance proceeds, warranty payments, judgments, and amounts charged to a particular tenant (after-hours HVAC, a tenant’s negligence, an exclusive-use repair) should not also sit in the shared pool.

Why tenants look: a dollar collected twice is not an operating expense. It is a residual. The debit side of the ledger is easy to print. The credit side — proceeds, chargebacks, vendor credits — is what tenants ask to see. A deductible is a separate sentence; some leases allow it, some cap it, some exclude it.

What to request: claim summaries and proceeds, warranty credits, tenant chargeback reports, and the GL accounts where those credits landed.

Landlord debt service, points, late fees, landlord-caused fines

Debt service, mortgage interest, points, and late fees the landlord incurred on its loan are commonly excluded. Fines and penalties caused by the landlord’s acts (code violations, late tax filings) are often in the same conversation. Interest the lease allows on a late tenant payment is a different clause.

Why tenants look: financing the owner’s basis is how the owner chose to buy the building. Tenants already pay base rent. A late-file penalty on the property-tax bill is not the tax; it is the cost of missing a deadline. A code fine for a condition the landlord was obligated to cure is not landscaping.

What to request: the GL detail behind “interest,” “penalties,” and “professional fees,” and the tax bill compared to the amount in the pool.

Income and franchise taxes versus property tax

Federal and state income taxes of the landlord, franchise taxes, and entity-level taxes are frequently excluded. Real-estate property tax is usually a pass-through, especially on an NNN lease. Do not confuse the two.

Why tenants look: a GL account named “taxes” can hold both. Income tax is a function of the owner’s profit. Property tax is a function of the parcel. Transfer taxes on a sale, and taxes on a refinance, belong with sale and financing costs, not with the county’s annual bill.

What to request: the property-tax bills and parcel IDs, and a split of any “taxes” account that is larger than those bills.

Ground rent

Ground rent under a superior lease is the landlord’s cost of holding the land, not (in most forms) a common-area operating cost. Some leases pass it through expressly. Many exclude it.

Why tenants look: ground rent is a financing-like charge for the dirt. If it is not in the definition, it does not become CAM because a bookkeeper coded it to occupancy cost. If it is in the definition, you still want the ground lease excerpt and the amount so it is not mixed with landscaping.

What to request: the ground rent invoice or notice, and the clause that includes or excludes it.

Unspent reserves

Some leases allow a reserve for replacements; many require that CAM reflect amounts actually incurred. An unspent reserve sitting in the year-end pool is a line to match against the lease.

Why tenants look: a reserve is cash the landlord has not yet spent on this year’s operations. If last year’s reserve was collected and this year’s reserve is collected again without a credit for the unused balance, tenants have prepaid twice for the same roof. If the lease allows a reserve, it usually also says what happens to the balance at year-end or at expiration.

What to request: the reserve policy, beginning and ending balances, and draws during the year.

Advertising, political, and other-property costs

Marketing for the landlord’s other assets, political contributions, and expenses of a different parcel are common questions when one management company runs several properties from one ledger.

Why tenants look: CAM is this building’s common area, not the owner’s platform or the next acquisition. A merchants-association or marketing fund that the lease requires is a different clause — it may be recoverable and still should not include political spend or ads for a sister property. Shared vendors need an allocation.

What to request: the marketing ledger, the allocation of shared vendors across properties, and any political or charitable lines.

Initial construction defects

Costs to repair defects in the original construction, or in a landlord-built expansion, are often excluded — sometimes expressly, sometimes as capital, sometimes as amounts that should have been a warranty or a claim against the contractor.

Why tenants look: a defect is the owner’s delivery problem, not this year’s landscaping. If a curtain wall leaks from the start and the repair is coded to “maintenance,” remaining tenants are funding a punch list. A later ordinary failure of the same system is a closer case.

What to request: when the system was installed, whether a warranty or contractor claim exists, and the invoice description.

Art and decorative upgrades (ordinary-maintenance leases)

Sculpture, gallery lighting, decorative stone upgrades, and similar items are often outside ordinary maintenance and repair. If the lease limits CAM to ordinary maintenance of the common area as it existed, an art program is a question. If the lease lets the landlord improve and recover, it may be in.

Why tenants look: decoration that is the owner’s branding is easy to code to “common area.” Ordinary paint and seasonal plants are usually not the fight. A six-figure installation is.

What to request: the invoices and whether the lease’s CAM definition is ordinary maintenance or a broader “operate and improve.”

Environmental cleanup unless the lease allows it

Investigation, remediation, and monitoring of hazardous materials are frequently excluded unless the lease expressly allows them, or unless they arise from a tenant’s own release. Pre-existing contamination is especially often kept on the owner.

Why tenants look: cleanup is capital-like, long-lived, and sometimes the residue of how the property was used before your term. Ordinary trap-and-interceptor maintenance is different from a site remediation. The lease’s hazardous-materials article and the exclusions exhibit both matter.

What to request: the consultant invoices, the condition they address, and the clause cited for recoverability.

Costs of curing a landlord default

Amounts the landlord spent to cure its own default — under the lease, a loan, a ground lease, or a law it was already obligated to meet — are commonly excluded.

Why tenants look: a default cost is the price of not having done the job on time. Passing it through would make tenants pay for the failure and for the cure. Distinguish that from ordinary compliance costs the lease allows (a new fire-life-safety contract after a code change) which some forms treat as recoverable, sometimes only if amortized.

What to request: the notice or citation, the cure invoice, and whether the underlying obligation was already the landlord’s.

Related-party markup

Charges from an affiliate of the landlord or the manager — landscaping, security, construction, insurance placement — may include a markup over the affiliate’s cost. Some leases limit related-party charges to competitive amounts or require disclosure.

Why tenants look: a third-party bid is a market check. An affiliate invoice without a bid is a transfer price. The OpEx chapter covers double recovery more generally. Markup is the specific version of that problem.

What to request: ownership of the vendor, bids or cost-plus support, and the lease’s related-party clause if there is one.

Management fee plus the same salaries

A stated management or administrative fee plus the salaries of the same people the fee was meant to cover is a stacking question. On-site payroll plus a fee on a base that includes that payroll is the usual pattern.

Why tenants look: many forms allow a fee in lieu of off-site overhead and still allow an on-site manager. Fewer forms intend a fee on top of the regional staff already in the pool. The fee section of the reconciliation chapter is the calculation. This line is the exclusion version: the salary should not be in the base if the fee replaced it.

What to request: the fee base, the payroll list, and the clause that allows one, the other, or both.

Legal fees for lease negotiations or landlord disputes with other tenants

Attorney fees to negotiate leases, to evict or sue another tenant, or to dispute a matter that is the landlord’s (a loan, a sale, an entity fight) are commonly excluded. Attorney fees to contest a property-tax assessment are a closer case and are sometimes allowed as part of the tax contest.

Why tenants look: leasing legal is a cost of acquiring rent. Litigation with another occupant is a cost of that occupancy, not of the common area. Tax-contest fees, if allowed, should be netted against the refund they produced. A general “professional fees” line is where these hide.

What to request: a split of professional fees by matter, and engagement letters or invoices with the matter name.

Costs of selling or financing the property

Brokerage on a sale, lender fees, appraisal for a refinance, transfer taxes, defeasance, and the landlord’s counsel on a loan or a disposition are commonly excluded. They are the cost of owning, selling, or borrowing against the asset.

Why tenants look: a refinance does not operate the parking lot. A sale is the owner changing hands. Tenants who paid CAM through a closing week should not also pay the seller’s broker. An appraisal ordered solely for a loan is not an operating report. (An appraisal the lease required for a CAM dispute is a different sentence.)

What to request: the GL detail around the sale or loan date, and any “professional fees,” “closing,” or “finance” accounts in the CAM year.

How to mark the statement and use the $79 checklist

Print the rollup. Number the lines. Next to each questioned line, write the heading above that fits and the lease clause you think applies. You will be wrong about some of them. That is fine. The point is a list you can send inside the window, not a finished legal memo.

Then type the landlord’s figures into the free calculator so the headline true-up is reconstructed from the pool as billed. Adjustments you believe belong — a capital line removed, a recovery credited — are a second pass, on paper, against that headline. The optional $79 landlord packet is a two-page worksheet: the line-item math plus a blank exclusion checklist with space for questioned dollars and a backup request. It is not an audit, not a subscription, and not a finding that any line is excluded. You fill the blanks from this chapter and from the lease.

This list is not complete. Forms add items; buildings invent new account names. If a cost is not ordinary operation of the common area you leased, mark it and ask. The lease still wins.