The short answer
CAM (common area maintenance) reconciliation compares what tenants paid in monthly CAM estimates to the actual shared operating costs for the year, then bills or credits each tenant the difference according to their lease's pro-rata share, caps, and exclusions. Accurate, well-documented reconciliations delivered on time are the best defense against tenant audits.
The annual cycle
- Budget: estimate the year's shared costs and set monthly CAM charges.
- Bill: tenants pay estimates with rent.
- Close: after year end, total the actual recoverable expenses.
- Reconcile: apply each lease's share, caps, gross-ups, and exclusions.
- Deliver: send statements with backup within the lease deadline; bill or credit the difference.
Where reconciliations go wrong
- Including costs the lease excludes, such as capital improvements or leasing commissions
- Wrong denominator — total building area versus leased area
- Ignoring caps on controllable expenses
- Missing the lease's delivery deadline, which can waive recovery
- Weak backup documentation when tenants request an audit
Good practice
Abstract each lease's CAM terms once, track expenses in recoverable and non-recoverable categories all year, and deliver a reconciliation package tenants can follow. See CAM charges for the basics.
Common questions
Can capital improvements be included in CAM?
Only if the lease allows it, and then often amortized over the improvement's useful life. Many leases exclude capital costs entirely.
How long do tenants have to audit CAM charges?
The lease sets the window, commonly a set number of months after receiving the reconciliation.
Reviewed October 2026 by Comet Management, Hamburg, NJ.