This can make it difficult for both the tenant and landlord to predict their future cash flows with any accuracy.To address this, some leases include "cap" and "floor" terms which limit these changes to fixed values on a year-over-year basis.Generally, landlords want CAM charges defined so broadly that they can pass through a majority of their operating expenses to tenants.The tenant generally wants CAM charges defined narrowly in hopes that the landlord pays a majority of the operating costs.Caps can be cumulative or compounded, and calculated year-over-base or year-over-year.
You will need to turn and keep your Night Vision OFF in this scenario.
An example of a CAM that is charged to only a subset of tenants might be the charges for cleaning the food court area, where all of the vendors in the court collectively cover the higher cost of cleaning the tables on a frequent schedule.
Landlord and Tenant negotiate CAM charges before signing the lease, so the charges vary from lease to lease, and operating costs that can be billed as CAM charges by the landlord vary from tenant to tenant.
Examples of services often billed to tenants as CAM charges include portering, parking lot striping, parking lot lighting, and landscaping.
CAM charges can be broken into two subcategories—controllable and uncontrollable.
Year-over-year caps mean the percentage increase applies not to a base amount, but to the actual CAM charge of the previous year.