What expenses are typically classified as non-controllable?

Real estate taxes, property insurance premiums, and utility costs from regulated providers are the most commonly accepted non-controllable expenses. Some leases also include government-mandated compliance costs. Everything else, including management fees, vendor services, and maintenance contracts, should be classified as controllable.

Why does the controllable/non-controllable distinction matter for my CAM cap?

If your CAM cap applies only to controllable expenses, any charge the landlord classifies as non-controllable is exempt from the cap and passed through at full cost. The more expenses the landlord can push into the non-controllable bucket, the less protection your cap provides.

Does CAMAudit check expense classifications?

CAMAudit's Rule 8 (Controllable Expense Cap Overcharge) verifies that capped expenses stay within the contractual limit and flags charges that appear to be misclassified to avoid the cap. It compares each line item's classification against your lease definitions.

Controllable vs Non-Controllable Expense Clause

Last updated: April 2026

By Angel Campa, Founder

Vague controllable vs non-controllable definitions let landlords shift expenses outside your CAM cap, potentially exempting 40-60% of costs from any ceiling.

What Is a Controllable vs Non-Controllable Expense Clause?

This clause divides operating expenses into two categories: controllable expenses (those the landlord can influence, like janitorial and landscaping) and non-controllable expenses (those driven by external forces, like taxes and insurance). CAM caps typically apply only to controllable expenses, while non-controllable expenses are passed through at actual cost.

Why This Clause Matters for CAM Audits

The classification of expenses as controllable or non-controllable directly determines which charges are capped and which are not. Landlords benefit from classifying as many expenses as possible as "non-controllable" because those are exempt from caps. Without a clear definition in the lease, the landlord has discretion to reclassify expenses to avoid cap limits.

Sample Lease Language

“For purposes of the CAM Cap, "Controllable Expenses" shall mean all Operating Expenses other than the following Non-Controllable Expenses: (a) real estate taxes and assessments; (b) property and liability insurance premiums; (c) utility charges from regulated providers; and (d) costs mandated by governmental regulations enacted after the Commencement Date. All expenses not specifically listed as Non-Controllable shall be deemed Controllable Expenses subject to the annual cap.”

This is illustrative language only. Your actual lease language controls your rights.

Red Flags to Watch

⚠No definition of "controllable" or "non-controllable" expenses, leaving classification to landlord discretion
⚠The non-controllable category includes items the landlord clearly controls (e.g., management fees, vendor contracts)
⚠Landlord can reclassify expenses between categories at will
⚠Most major expense categories are listed as non-controllable, gutting the cap
⚠Administrative and management fees are classified as non-controllable

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Negotiation Tips

✓Define both categories with explicit lists rather than general descriptions
✓Limit non-controllable expenses to truly external costs: taxes, insurance, and government-mandated items only
✓Include a default classification that any unlisted expense is deemed controllable
✓Require landlord to provide a breakdown showing controllable vs non-controllable expenses in each reconciliation

Key Data

40-60%
In leases with vague definitions, an estimated 40-60% of total operating expenses may be classified as non-controllable [industry estimate]
Source: Lease Negotiation Industry Analysis (2024)

Explore Other Lease Clauses

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Frequently asked questions

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.

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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.