How to audit a CAM reconciliation against your lease

In short: to audit a CAM reconciliation, read the lease first and the landlord’s statement second. Find the pro rata share, the base year or expense stop, the exclusions, any gross-up, the cap on controllable expenses and any limit on management or administrative fees. Recompute your share line by line under those rules, compare each figure with the statement, and send the differences, with their clauses, before the audit window closes.

What is a CAM reconciliation?

Through the year, most commercial tenants pay monthly estimates for common area maintenance (CAM), operating expenses and often taxes and insurance. After year end, the landlord compares actual costs with the estimates and sends a reconciliation: the building’s expenses, the tenant’s share, what the tenant paid, and a balance due or a credit. Office leases often call it an operating expense reconciliation.

The statement is the landlord’s arithmetic applied to the landlord’s reading of the lease. A CAM audit tests both.

Which lease clauses decide what you owe?

Before opening the statement, pull these from the lease and every amendment:

Term	What to look for
Pro rata share	The percentage, or the formula behind it, and whether the building’s area can change
Base year or expense stop	The year or amount you pay increases over, and whether taxes have their own base
What’s included	The definition of Operating Expenses or CAM, and whether taxes and insurance sit in the same pool
Exclusions	Costs the landlord can’t pass through, such as capital improvements, leasing commissions, financing costs and costs repaid by insurers or other tenants
Gross-up	Whether costs that vary with occupancy are adjusted to a stated occupancy, such as 95%, in both the base year and the current year
Cap	A limit on increases in controllable expenses: the percentage, what counts as controllable, and how it compounds
Fees	A limit on the management fee, and whether any administrative or overhead fee is allowed at all
Audit right	How long you have, what notice to give, and who pays for the audit

If the lease abstract already records these with their clauses, start from it.

How do caps on controllable expenses work?

A cap limits how much the controllable expenses can rise each year. Three details change the answer:

What counts as controllable. Leases usually list what isn’t, often taxes, insurance and utilities, which tend to be the most volatile lines. See expense caps with large exclusions.
Cumulative or not. A cumulative cap lets unused room from a low year carry forward; a non-cumulative cap measures each year against the one before.
Compounding or simple. A compounding cap applies the percentage to the previous year’s capped amount; a simple cap applies it to the base year.

What about management and administrative fees?

Management fees are often limited to a percentage of the building’s gross revenues or of its operating expenses. Check which base applies, since the two give very different numbers, and whether the fee falls under the cap.

An administrative or overhead fee is a separate percentage added on top of the tenant’s share. If the lease doesn’t provide for one, it isn’t owed. If it does, check what it is charged on: some leases keep taxes and insurance out of the fee base.

The fictional Harborview Tower 2026 reconciliation bills Northwind Analytics for Suite 1200. Its office lease says:

Tenant’s Share is 4.15% (p. 2), and the tenant pays its share of the amount by which Operating Expenses and Taxes exceed those of the 2025 Base Year (§5.1, p. 4).
Controllable Operating Expenses can’t rise more than 5% a year over the prior year; insurance, utilities, taxes, snow removal and security aren’t controllable (§5.2, p. 4).
The management fee can’t exceed 3% of the building’s gross revenues (§5.3, p. 4).
The lease provides for no administrative fee, and has no gross-up clause.

The statement bills $2,736,000 of expenses over a $2,410,000 base year, and adds a 10% administrative fee. Recomputed under the lease:

Step	Statement	Under the lease
Management fee	$171,000 (4.0% of $4,275,000 revenues)	3% × $4,275,000 = $128,250
Controllable expenses	$452,000 + $298,000 + $171,000 = $921,000	$452,000 + $298,000 + $128,250 = $878,250, capped at $830,000 × 1.05 = $871,500
Other expenses and taxes	$1,815,000	$1,815,000
Total	$2,736,000	$871,500 + $1,815,000 = $2,686,500
Excess over base year	$326,000	$2,686,500 − $2,410,000 = $276,500
Tenant’s share at 4.15%	$13,529.00	$11,474.75
Administrative fee	$1,352.90 (10%)	None in the lease
Total for 2026	$14,881.90	$11,474.75
Less estimates paid	$12,000.00	$12,000.00
Balance	$2,881.90 due	$525.25 refund

The statement overbills the year by $14,881.90 − $11,474.75 = $3,407.15. Because the tenant has already paid $12,000 in estimates, that turns a $2,881.90 bill into a $525.25 refund.

Some questions the statement can’t answer. Ask for the base year’s line items (it gives 2025 as one figure, and a base year built on different rules distorts every year after it), invoices for the largest lines, and support for the $4,275,000 of revenues the fee limit depends on.

When does the audit window close?

Audit rights usually come with a deadline counted from when you receive the statement, and a statement nobody challenges in time may become final. The sample lease allows 120 days after receipt of the annual statement (§5.4, p. 4). If the statement arrived on its date:

February 15, 2027 + 120 days = June 15, 2027

The statement asks for payment within 30 days, by March 17, 2027. This lease says all Rent is paid “without demand, deduction or offset” (§3.1, p. 3), so check with counsel before you short-pay.

The same clause makes the landlord pay for the audit if it discloses an overcharge of more than 4%. Measured against the tenant’s bill, the overcharge here is $3,407.15 ÷ $11,474.75 = 29.7%. Measured against the building’s expenses, it is $49,500 ÷ $2,686,500 = 1.8%. The lease doesn’t say which base applies, so raise it before you commission an audit.

Put the deadline on your critical dates list the day the statement arrives.

What should you send the landlord?

Within the window, send written notice the way the lease’s notice clause requires, with:

the statement you dispute, and its date
each disputed item: billed, allowed, the difference and the clause
your recomputed share, and the balance or refund it gives
the records you want to see
notice that you are exercising the audit right, if you are

In the example, that is three items: the management fee over 3% (§5.3), controllable expenses over the 5% cap (§5.2) and an administrative fee the lease doesn’t provide for, giving a $525.25 refund instead of $2,881.90 due. With each billed figure beside its clause, the landlord’s side can check your work without rebuilding it.

Audit a CAM reconciliation in minutes

CREparser Deal Review recomputes a CAM reconciliation under the lease inside Claude: the tenant’s share with the lease’s exclusions, caps, gross-up, base year and fees, and each billed figure compared with it, every figure linked to its clause or line. See what Deal Review checks.

Try it with the sample CAM reconciliation and the office lease it bills under. Your first 5 documents are free.