Specific costs legally barred from being passed through to the tenant.
Also known as: Unallowable Expenses, Carve-outs
By Angel Campa, Founder · Updated March 2026
Without explicit CAM exclusions, landlords can pass through capital expenditures, executive salaries, leasing commissions, and even litigation costs as "operating expenses." A single roof replacement at $200,000 passed through pro rata to tenants represents tens of thousands in unexpected charges. A comprehensive exclusion list is the tenant's primary defense against inflated CAM bills and is essential for effective audit verification.
Found in the "Operating Expenses" or "CAM" section, typically as a numbered or bulleted list of excluded items. In well-negotiated leases, this list can span several paragraphs. May also appear in a separate definitions exhibit.
Lextract uses a combination of AWS Textract OCR and Claude AI to identify and extract the cam exclusions from your lease PDF. The AI searches for the field name and common aliases like "Unallowable Expenses", "Carve-outs" across all pages of the document, then assigns a confidence score based on OCR quality and extraction certainty. Fields with lower confidence are flagged for human review.
Lextract automatically checks this field against its 15-rule red flag engine. Issues detected for cam exclusions:
Lease Structure
The categorization of expense sharing.
Pro Rata Share
The tenant's fractional responsibility for total building operating expenses.
Base Year
The foundational year used to calculate operating expense increases in gross leases.
CAM Cap %
The maximum allowable annual increase for controllable operating expenses.
CAM Cap Type
Specifies whether the CAM cap is cumulative and compounding or non-cumulative.
Gross-Up %
The assumed occupancy level used to extrapolate variable operating expenses.
Critical exclusions include: capital expenditures (or amortization limits), executive/officer salaries above site level, leasing commissions, legal fees for disputes with other tenants, costs reimbursed by insurance, landlord's income taxes, depreciation, mortgage payments, and advertising costs for vacant space.
Without exclusions, the landlord has broad discretion to include nearly any building-related cost in operating expenses. This can lead to surprise charges for capital improvements, legal disputes with other tenants, or cosmetic renovations that primarily benefit the landlord's property value.
Yes, but it requires landlord agreement. Tenants are in the strongest negotiating position before signing the lease or during renewal negotiations. Adding exclusions mid-term is possible but difficult since the landlord has little incentive to agree.
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