A CAM cap expressed as a maximum percentage increase per year, such as "CAM shall not increase more than 5% annually." Percentage caps are the most common cap format and can be compounding or non-compounding, cumulative or non-cumulative.
A percentage cap defines the maximum year-over-year increase as a percentage of the base (non-compounding) or the prior year's amount (compounding). The four variations, compounding cumulative, compounding non-cumulative, non-compounding cumulative, and non-compounding non-cumulative, produce materially different financial outcomes over the lease term. The lease language determines which variant applies, and ambiguous language is a frequent source of disputes.
A lease says "increases shall not exceed 5% per year" without specifying whether the percentage applies to the base or the prior year. The landlord applies it as compounding (prior year), producing 63% growth over 10 years instead of the 50% the tenant expected under a non-compounding interpretation.
Ensure your lease specifies all four parameters: the cap percentage, whether it compounds, whether it is cumulative, and what the base reference point is. Ambiguity on any of these points gives the landlord interpretive flexibility that works against you.
Worried about percentage cap in your lease?
Need to extract lease terms before your audit?
A CAM audit is only as accurate as your lease data. lextract.io extracts 126 structured fields from any commercial lease PDF: CAM definitions, pro-rata share, caps, base year, and audit rights. So you have the exact terms your landlord is supposed to follow.
Go to lextract.ioUpload two PDFs. 14 detection rules. Under 15 minutes. Free.
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.
