Every NNN lease that includes an audit rights clause sets a deadline. After that deadline passes, the tenant's right to dispute the CAM reconciliation expires — permanently, in most leases. It doesn't matter whether the landlord made an error. It doesn't matter whether the error is $500 or $15,000. Once the window closes, the reconciliation is typically deemed final.
Most franchise tenants don't know when their window closes, or in some cases, that a window exists at all.
What the Audit Rights Clause Actually Says
The audit rights clause — sometimes called an inspection right, examination right, or challenge period — specifies a period after receiving the annual CAM reconciliation during which the tenant can:
- Request backup documentation from the landlord
- Review the documentation for errors
- Raise a formal dispute
The window length varies by lease. Common provisions:
- 6 months from delivery of the reconciliation statement
- 12 months from delivery of the reconciliation statement
- 90 days from delivery (less common but exists in some institutional landlord templates)
Some leases set the window from the end of the lease year rather than the delivery date. This distinction matters less when reconciliations arrive on time but becomes significant when the landlord is late delivering.
A sample clause might read: "Tenant shall have the right, no more than once per calendar year, to examine Landlord's records related to the Operating Expenses for a period of twelve (12) months following the date Tenant receives the Annual Reconciliation Statement. If Tenant fails to contest any items within such period, the Annual Reconciliation Statement shall be deemed final and binding upon Tenant."
The phrase "deemed final and binding" is the operative language. After the window: no recovery.
When the Clock Starts: Delivery Date, Not Year End
This is the error most frequently made by tenants who do track their windows. They calculate the deadline from the end of the lease year, not the date they received the reconciliation.
Example:
- Lease year: January 1 to December 31, 2024
- Landlord delivers reconciliation: March 15, 2025
- Audit window: 12 months from delivery
The window closes: March 15, 2026. Not December 31, 2025.
If you received a reconciliation with a significant true-up in March 2025 and assumed your window ran through the end of 2025, you still have time. But a tenant who calculated from December 31, 2024 might conclude their window closed before it actually did — and decide not to pursue a review.
Conversely, some tenants calculate from the lease year end and overestimate their remaining time. If a landlord delivers early — say, January 15, 2025 for the 2024 lease year — a 12-month window from delivery closes January 15, 2026, not December 31, 2025.
Always confirm the delivery date. Check your email records or any written notice from the property manager. The date you received the reconciliation is the starting point.
What Happens When the Window Closes
After the window closes, the reconciliation is typically final. This means:
You lose the right to recover. Even if a subsequent audit of a prior year's records would reveal an overcharge, you cannot recover overpaid amounts from years where the window has closed.
You cannot dispute that year's charges. A dispute letter sent after window expiration will typically be rejected on procedural grounds, regardless of the substance of the claim.
The error does not necessarily stop. If the overcharge is systematic (a persistently wrong denominator, a management fee that consistently exceeds the cap), the same error will appear in future years. You can dispute future years that are still within their windows, but you cannot recover past overpayments from closed years.
This asymmetry is significant. Landlords who make billing errors have limited downside from those errors in years where the tenant doesn't exercise audit rights. The error simply becomes finalized at the end of the window.
How to Check Whether Prior Years Are Still Open
For each active lease, identify:
- The reconciliation delivery date for the most recent lease year (check email records, property manager correspondence, or the date stamp on the reconciliation document itself)
- The window period from your lease (6, 12 months, or other)
- The resulting window close date
Repeat this for the prior year's reconciliation if you haven't previously reviewed it. A window that closes in 6 weeks is urgent. A window that closes in 8 months gives you time to conduct a proper review.
If you cannot confirm the delivery date because you don't have records, request confirmation from the property manager: "Could you confirm the date the 2024 annual CAM reconciliation was delivered to our account?" Most property managers can provide this quickly and without raising concerns.
The Risk of "I'll Review It Later"
Franchise operators managing multiple locations often receive reconciliations during Q1 (when landlords are doing their year-end work) at the same time as tax season, annual budget reviews, and other time-consuming activities. The reconciliation goes into a folder with a mental note to review it later.
"Later" often becomes "too late" when the window is 6 months and the first available time feels like month 7.
A practical system:
- When a reconciliation arrives, record the delivery date immediately in a lease register or calendar
- Set a calendar alert 30 days before the window closes
- Use that 30-day alert as a forcing function: either complete the review or make a deliberate decision to let the window close
The decision to let a window close is legitimate if the charges seem correct and the review cost doesn't make sense for the amount at stake. What is not legitimate is losing the right by accident because the window wasn't tracked.
Verification Action
For each active NNN lease you hold, confirm: (1) the date your most recent reconciliation was delivered, and (2) how long your audit window is per the lease. Calculate the window close date. If any window closes within 90 days, treat it as urgent. If any window close date has already passed in the current year without a review, document that the prior year is now closed and focus on ensuring the current year's window is tracked.
Frequently Asked Questions
What if the landlord never delivered the reconciliation? Does the window still run? Most leases tie the window to delivery of the reconciliation. If no reconciliation was delivered, the window has not started. However, some leases include a provision that allows the window to run from a certain date regardless of delivery, or require the tenant to request the reconciliation if it's not delivered by a specified date. Review your lease carefully and contact your property manager if a reconciliation is overdue.
Can the landlord extend the window voluntarily if we're mid-review? Yes. Landlords can agree in writing to extend the review window. If you are in the middle of a review and the window is approaching, request a written extension. Get the extension confirmed in writing before the original window closes.
Does the window apply to both overcharges and undercharges? Most audit rights clauses are written for tenant-side review and apply to claims the tenant may have against the landlord for overcharges. The window typically does not limit the landlord's right to collect underpayments — the landlord's ability to collect additional amounts is governed by a different (usually longer) provision or by the statute of limitations.
What if we find an error after the window closes — can we at least stop paying the incorrect charge going forward? For prospective charges, yes — if the same error is being applied to the current year's billing and that year's window is still open, you can dispute it in the current year. The fact that you also overpaid in a closed year doesn't prevent you from disputing the same error in open years.
What if the lease has an evergreen renewal and we've been in the space for 10 years? Each year is treated as a separate reconciliation with its own window. Prior years where windows have closed are final. Recent years where windows are open can be reviewed. The length of your tenancy does not reopen closed windows.
Run your reconciliation and lease through CAMAudit to check for these patterns against your specific lease terms.