Glossary
Lease Terms & Dates
Lease Year
The 12-month period a lease uses for CAM reconciliation, escalation calculations, and cap testing. A lease year does not always match the calendar year. It commonly runs from the lease's commencement date or a landlord-defined fiscal year instead.
Firm impact
Reconciling a client's CAM statement against the wrong 12-month boundary can shift expenses into or out of a capped period, changing whether a cap violation exists at all. Firms should confirm the lease year definition before testing any cap or escalation math against a reconciliation statement.
How this gets abused
A lease defines the lease year as running July 1 to June 30, but the landlord's reconciliation statement reports on a calendar-year basis. A large repair invoice from June falls into the prior lease year under the correct boundary but gets billed in the following period instead, pushing costs into a year with a higher cap ceiling.
Practitioner note
Confirm the lease year definition in the lease's definitions section before testing any cap, escalation, or reconciliation math. If the landlord's reconciliation statement uses a different period than the lease defines, request a restated reconciliation using the correct boundary.
Related terms
FAQ
Questions about lease year
Is a lease year always the same as a calendar year?
No. Many leases define the lease year as starting on the commencement date or the landlord's fiscal year, which rarely lines up with January through December.
Why does the lease year boundary matter for a cap calculation?
Cap violations and escalation math are tested within a single lease year. If expenses are shifted across the boundary, a charge that should trigger a cap violation in one year can appear to fall under the cap instead.
You know the term. Now check the math.
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