The operating expense definition controls every dollar of CAM you pay, and an estimated 80%+ of standard leases use open-ended language that favors landlords.
The operating expense definition clause establishes what costs qualify as "operating expenses" that can be passed through to tenants. This is the master definition that controls every dollar of CAM charges. It typically includes maintenance, repairs, insurance, taxes, management fees, and utility costs, but the specific inclusions and exclusions vary dramatically between leases.
The breadth of the operating expense definition is the single largest factor in determining your total CAM liability. A broad definition with "including but not limited to" language gives the landlord nearly unlimited ability to add new cost categories. A narrow, closed-list definition protects tenants by limiting pass-throughs to specifically enumerated items.
“Operating Expenses shall mean and be limited to the actual costs incurred by Landlord for the operation, maintenance, repair, and management of the Building and Common Areas, specifically: (a) compensation and benefits for on-site management and maintenance staff below the level of senior executive; (b) costs of cleaning, landscaping, and trash removal; (c) utility costs for Common Areas; (d) repair and maintenance of Building systems, paving, and structures; (e) property and liability insurance premiums; (f) real estate taxes and assessments; (g) property management fees as limited elsewhere in this Lease; and (h) supplies, materials, and equipment used in maintaining the Common Areas.”
This is illustrative language only. Your actual lease language controls your rights.
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80%+
An estimated 80% or more of standard-form commercial leases use open-ended operating expense definitions that favor landlords [industry estimate]
Source: Commercial Lease Audit Industry Reports (2024)
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