A CAM cap that limits expense increases independently each year, with no carryover of unused capacity from low-expense years. This is the most tenant-friendly cap structure because the landlord cannot "catch up" by passing through a large increase after years of being under the cap.
Under a non-cumulative cap, the maximum allowable CAM in Year N equals the lesser of actual expenses or the prior year's capped amount multiplied by (1 + cap rate). Unused cap room from prior years is forfeited. This structure functions as a hard ceiling on year-over-year volatility. When combined with a non-compounding base (increase applied to base year rather than prior year), it provides the strongest cost containment.
A landlord treats a non-cumulative cap as cumulative, banking unused increases from three low-expense years and passing through a 15% increase in Year 4 against a lease that specifies a 5% non-cumulative cap. The overcharge is the difference between the 5% allowed increase and the 15% billed.
Verify every year that your capped amount resets based on the prior year's capped figure, not an accumulated ceiling. If your landlord claims a right to "catch up" on unused cap room, check whether your lease specifically says "cumulative" or "non-cumulative." Silence on this point usually favors the landlord.
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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.
