A lease clause that allows unused cap room from one year to be carried forward and added to the cap limit in subsequent years. Similar to a cumulative cap, carryover provisions increase the effective cap in future years when prior years were below the cap.
A carryover provision accumulates the difference between the cap limit and actual expenses in years where expenses fall below the cap. This "banked" amount is added to the cap in future years. The key distinction from a catch-up provision is timing: carryover adds to future cap room (landlord can charge more when expenses rise), while catch-up allows recovery above actual expenses (landlord can charge more even when expenses are low). Both weaken the tenant's cap protection.
After three years of low expenses with 3% unused cap room each year, the landlord adds 9% of banked room to the Year 4 cap and passes through a 14% increase (5% cap plus 9% carryover). The tenant assumed a hard 5% annual limit.
Check your lease for carryover language, which may be phrased as "banking," "accumulation," or "rollover" of unused cap increases. If carryover exists, track the banked amount each year so you can verify the landlord's calculations when they invoke it.
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Find My OverchargesThis 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.
