7 CAM Reconciliation Errors That Cost Landlords the Most
Quick Answer
Seven specific errors cause most of the dollar damage in CAM reconciliations: gross-up applied to a building already at target occupancy, cap rates typed as whole numbers instead of decimals, a zero prior-year that zeroes out the cap entirely, the cumulative cap bank treated as unlimited, occupancy records thrown off by overlapping or reversed lease dates, admin fees calculated before the cap reduces the tenant's share, and a base year set during an anomaly year. Most go unnoticed for years.
1. Applying Gross-Up When the Building Is Already Full
The gross-up adjustment normalizes CAM expenses to what they would be at full occupancy. Tenants in a half-empty building should not benefit from artificially low costs — they pay based on what the building would cost to run when fully occupied. The formula is:
The error is straightforward: when actual occupancy already meets or exceeds the target, the formula produces a factor above 1.0. That means expenses are grossed up past what they would be at 100% occupancy, which is not possible. No gross-up should apply when actual occupancy ≥ target.
On a $200,000 CAM pool, a factor of 1.03 adds $6,000 in charges that should not be there. Tenants who eventually audit will demand that back, sometimes with interest.
2. Cap Rate Entered as a Percentage Instead of a Decimal
Lease abstracts say things like "5% annual cap." The calculation engine wants 0.05, not 5. Entering 5 sets a 500% cap, which is no cap at all.
The inverse also happens: entering 105 instead of 1.05. Some systems interpret cap rates above 1.0 as "105% of prior year." Others reject the value outright. Either way, the result is wrong.
Pull your cap rates from the billing system and check them against the leases. A value above 2.0 is almost certainly a data entry error. A value of exactly 5 or 10 is the textbook version of this mistake.
3. Zero Prior Year Locking Tenants Out of CAM Charges
Non-cumulative cap calculations determine the maximum allowed charge as:
New tenants have no prior year. Prior year CAM = $0, so max_allowed = $0. The tenant owes nothing regardless of actual CAM expenses. Mathematically correct. Economically nonsensical. The intent was to cap growth from a starting baseline, not to set the entire cap at zero.
When prior year CAM is $0, skip the cap and bill the full pro-rata share. The cap should only apply starting Year 2. Many billing systems handle this wrong and will not tell you.
4. Misunderstanding the Cumulative Cap Bank
A cumulative cap lets landlords bank the difference between actual growth and the cap limit. Spend less than the cap allows and the difference carries forward. Here is what that looks like over three years with a 5% cap and a $100,000 starting base:
| Year | Actual Growth | Cap Limit | Bank Balance | Amount Billed |
|---|---|---|---|---|
| Year 1 | 2% | 5% | +3% banked | $102,000 |
| Year 2 | 3% | 5% | +5% banked (8% total) | $105,060 |
| Year 3 | 10% | 5% + 8% bank = 13% | −8% drawn; $0 balance | $116,617 |
Once the bank is drawn, it is gone. Landlords who think it accumulates indefinitely will over-collect when expenses spike. Tenants who do not understand the bank will dispute a Year 3 bill that looks like a 10% increase when the cap said 5%.
5. Occupancy Miscalculations from Overlapping or Reversed Lease Dates
Pro-rata calculations start with occupancy. Get occupancy wrong and every tenant's share is wrong. Two data entry mistakes do this without any error message:
- Overlapping leases — two tenants recorded in the same space during the same period. Building occupancy exceeds 100%, which breaks the denominator for every tenant, not just the two with the conflict.
- Reversed dates — end date before start date. Most billing systems silently skip these leases. Enough skipped leases and the building looks nearly vacant, sending the gross-up factor to extreme values.
Before every reconciliation, total the active lease square footage for each billing period. It should never exceed the building's rentable area. Any lease where end date ≤ start date needs fixing before the numbers touch a reconciliation.
6. Admin Fee Calculated Before Caps Are Applied
Admin fees (typically 10–15%) cover the landlord's cost of managing common areas. They should apply to what the tenant actually owes after cap reduction, not to the full expense pool before any cap is applied.
✗ Wrong: admin_fee = expense_pool × 0.15
✓ Correct: admin_fee = tenant_share_after_cap × 0.15
Say the cap reduces a tenant's share from $30,000 to $22,000. Admin fee on the gross pool: $4,500. Admin fee on the capped share: $3,300. That $1,200 error repeats every year, across every capped tenant in the building. Most leases are explicit that admin fees apply to the reconciled share, not the pool.
7. Base Year Selected During an Anomaly Year
In a base-year lease, the tenant pays only for CAM increases above the base. Set the base during a year with 20–30% vacancy and you have locked in an artificially low floor. Every subsequent year, normal occupancy-level expenses look like a large spike.
A tenant who signed in 2021 with a 2021 base might have base year CAM of $8/SF. By 2025, fully occupied, the building runs $12/SF. The tenant pays $4/SF more than they should every year, not because anything grew abnormally but because the floor was wrong from the start.
The fix is base-year normalization: gross up the base year expenses to what they would have been at target occupancy, then use that as the baseline. Leases negotiated during vacancy-heavy years should spell this out explicitly. Many do not. The landlord collects the difference until the tenant audits.
Frequently Asked Questions
What is the most common CAM reconciliation error?
Two data-entry mistakes show up more than anything else: gross-up applied to a building that's already at target occupancy, and cap rates typed as whole numbers (5 instead of 0.05). Billing systems accept both without complaint. The first over-bills tenants on every reconciliation where actual occupancy meets the target. The second makes the cap meaningless.
How do I know if my CAM statement has a gross-up error?
Divide your target occupancy by actual occupancy. If actual is at or above target, the result should be exactly 1.0. Any factor above 1.0 in that situation is wrong. On a $200,000 pool, even a factor of 1.03 adds $6,000 in charges that should not exist.
Can a tenant dispute a CAM reconciliation error?
Yes, within the audit window — typically 12 to 36 months from when the statement was delivered. Tenants can request supporting documentation and dispute specific charges. Gross-up and cap errors are among the most common issues raised. Once the window closes, the right to challenge prior-year statements is usually gone.
What is a cumulative CAM cap and how does the cap bank work?
When actual CAM growth comes in below the cap limit, the difference carries forward as a bank. If the cap is 5% but expenses only grew 2%, the landlord banks 3%. In a later year with 8% growth, the landlord can draw from the bank and pass through more than the base cap would allow. Once drawn, the banked capacity is gone. Landlords sometimes treat it as indefinitely accumulating; tenants sometimes don't know it exists. Both create disputes.
How does CAMAudit detect these errors automatically?
Upload your GL export and CAMAudit runs each of the seven checks against your lease terms: gross-up factor vs. actual occupancy, cap rate format, zero prior-year traps, overlapping and reversed lease dates, admin fee sequence, and base year anomalies. Each issue gets a dollar-impact estimate, not just a flag.