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How to Respond to a Tenant CAM Dispute

By Angel Campa, Founder, CAMAudit

Quick Answer

Pull the primary-source documents first — GL with chart of accounts, gross-up calculation, vendor invoices, and occupancy records. Validate the math independently before responding. Most disputes narrow considerably when the landlord produces complete documentation within 30 days. The ones that don't settle usually trace to a real error in the gross-up or management fee base.

What a Tenant CAM Dispute Actually Is

A dispute is a formal written objection invoking the audit rights clause in the lease. It is not the same as a tenant calling to ask questions about a line item. A formal dispute triggers the landlord's obligation to produce documentation — and in most leases, starts a clock on how long you have to respond before the tenant can escalate.

The dispute landscape

  • 40% of CAM reconciliations contain material billing errors [Source]
  • 28% of tenants discover CAM discrepancies without hiring an outside auditor [Source]
  • 15–33% contingency fee charged by tenant audit firms on recovered amounts (industry standard)

Tenant auditors work on contingency. Their fee depends on finding errors. That is not a reason to panic — it is a reason to get your documentation in order before responding, so a legitimate charge does not get lost in a paper trail gap.

How Long Does a Tenant Have to Dispute CAM Charges?

The standard audit window

The audit window is contractual, not statutory. Most commercial leases give tenants 12 to 36 months from statement delivery to exercise audit rights. The clock starts when the reconciliation statement reaches the tenant — not when the landlord sends it. Check the specific language in the audit rights clause. Some leases count from delivery; others from the end of the calendar year.

California SB 1103 adds a statutory deadline

For California landlords with qualifying small-business tenants (microenterprises, restaurants under 10 employees, nonprofits under 20 employees), Civil Code §1950.9 adds a 30-day production window. Once a qualifying tenant makes a written documentation request — email counts — the 30-day clock starts. Partial production does not stop the clock. Missing the deadline creates civil liability including treble damages.

See the full compliance requirements in the SB 1103 compliance guide.

The First 48 Hours: What to Pull Before You Respond

Before you write a single word of response, pull these six documents. Responding without them is guessing. Responding with them means you either know your numbers are right — or you find the error yourself before the auditor does.

1

GL with chart of accounts

The primary source — not a summary printout. The GL must show account names, descriptions, and posting dates. A management system's CAM ledger is not the same thing as the GL. Auditors will reject it.

2

BOMA gross-up calculation

Variable costs only — janitorial, trash, utilities. The calculation must show actual monthly occupancy as the source, not an estimated annual figure. Each month's factor is a separate line.

3

Management fee base statement

Cross-reference this against the lease clause defining what costs are included in the fee base. If the lease excludes CapEx and the fee base includes it, that is the dispute right there.

4

Vendor invoices

Original PDFs, organized by month and expense category. Not AP summaries. The invoice must show the vendor name, work description, property address, and amount. SB 1103 in California makes this a statutory requirement for qualifying tenants.

5

Occupancy records

Monthly, from the rent roll — not a year-end snapshot. Mid-year moves, expansions, and contractions must appear. This is what validates the gross-up factor for every month of the reconciliation year.

6

Lease abstract with relevant terms

Pull the specific clauses: expense inclusions and exclusions, gross-up language, cap structure, admin fee definition, audit rights window. You are defending against those exact terms, not the general lease.

How to Validate Your Own Numbers Before Responding

Re-run four calculations before you touch the response letter. If any of them come out different from what you billed, you want to know that now — not in a deposition.

1. Gross-up recalculation

Separate variable costs from fixed before applying the formula. Janitorial, trash, and utilities are variable. Property insurance, real estate taxes, and fixed-contract landscaping are not. On a $300,000 variable pool with a 95% target at 80% actual occupancy, the correct factor is 1.1875. Applying it to the full pool instead of the variable portion adds charges that don't belong.

2. Pro-rata denominator

Most leases define the denominator as Gross Leasable Area — total building SF, fixed. If your system used leased area instead, every vacancy spikes remaining tenants' shares. Pull the lease definition and compare it to what the system actually used.

3. Cap limit application

Check whether the cap is cumulative or non-cumulative. A cumulative cap lets you bank unused capacity from prior years; non-cumulative resets each year. The wrong type adds or removes thousands of dollars in a year where expenses spike. Also confirm the cap applies to controllable expenses only — taxes and insurance typically pass through uncapped.

4. Admin fee sequence

Admin fees should apply to the tenant's reconciled share after the cap is applied, not to the gross expense pool before the cap. On a $30,000 share reduced to $22,000 by a cap, admin fee on the gross pool adds $1,200 that should not be there. It repeats every year across every capped tenant.

How to Respond to a Tenant CAM Dispute Letter

What the response should include

A defensible response has four components: acknowledgment of the dispute with the specific lease clauses invoked, the complete six-document package described above, a line-by-line rebuttal matching each disputed item to the supporting documentation, and a clear statement of your position — either a credit memo with a corrected amount or a written explanation of why the original charge is correct.

When the tenant is right

Issue a corrected reconciliation statement and a credit memo before the auditor formally documents the finding. A landlord who self-corrects controls the narrative. One who waits for the auditor to force a correction pays the auditor's contingency on top of the overcharge.

When the tenant is wrong

Send the full documentation package with a written rebuttal that cites specific lease clauses for each contested item. Do not argue informally. Put the response in writing, reference the audit rights clause, and give the tenant a deadline to respond if they intend to escalate.

What Tenant Auditors Look For — and How to Preempt It

Auditors don't start randomly. They run a targeted sweep against the line items where property management accounting fails most predictably:

  • CapEx/OpEx misclassification — full roof replacement billed as operating expense
  • Gross-up applied to fixed costs — insurance and taxes included in the variable pool
  • Management fee base inflation — CapEx or taxes included in the fee calculation base
  • Ownership expenses in the CAM pool — executive salaries, leasing commissions, entity legal fees
  • Pro-rata denominator manipulation — leased area used instead of GLA
  • Base year errors — base set during a vacancy year without normalization
  • Utility double-billing — after-hours HVAC revenue not credited back to the pool

See the full tenant auditor guide for the detailed breakdown of each finding.

Build the Response Package Before the Letter Arrives

CAMAudit keeps an immutable finalized snapshot of every reconciliation. When a dispute letter arrives, the documentation package already exists.

Start Free Audit

Frequently Asked Questions

How do I respond to a tenant CAM audit dispute?

Pull the six primary-source documents first: the GL with chart of accounts, the gross-up calculation showing actual monthly occupancy, the management fee base statement, original vendor invoices, monthly occupancy records from the rent roll, and the lease abstract with the relevant expense and audit clauses. Re-run your gross-up, pro-rata denominator, cap limit, and admin fee sequence before responding. If your numbers hold, send a formal written response with a complete documentation package and a line-by-line rebuttal citing the specific lease clauses. If you find an error, issue a corrected statement and credit memo before the auditor documents it.

How long does a tenant have to dispute CAM charges?

The audit window is contractual, not statutory — typically 12 to 36 months from statement delivery. The window length is in the lease's audit rights clause. In California, SB 1103 (Civil Code §1950.9) adds a 30-day production deadline for landlords with qualifying small-business tenants: once the tenant makes a written documentation request, the landlord has 30 days to produce compliant records. Missing that deadline creates civil liability including treble damages.

What documentation does a landlord need to defend CAM charges?

Six documents cover most disputes: the general ledger with chart of accounts, the gross-up calculation showing variable costs only and monthly occupancy as the source, the management fee base statement cross-referenced to the lease clause, original vendor invoices organized by month and category, monthly occupancy records from the rent roll, and a lease abstract covering expense inclusions, exclusions, gross-up, caps, admin fees, and audit rights. Missing any of these weakens your position even if the underlying numbers are correct.

What is the most common reason tenants win CAM disputes?

Documentation gaps — not arithmetic errors. The most common scenario is that the landlord's charges are correct but the supporting records are incomplete or inaccessible. Gross-up applied to fixed costs is the most common substantive error: property insurance, real estate taxes, and fixed-contract landscaping are not variable and do not change with occupancy. Applying the gross-up formula to those items overbills tenants in any year where actual occupancy is below target.

Can a tenant dispute CAM charges after the lease ends?

Yes, if the dispute is filed within the contractual audit window. Most leases give tenants 12 to 36 months from statement delivery to exercise audit rights, and the lease ending does not automatically close that window. The tenant must invoke the audit rights clause within the stated timeframe. Some leases specifically address post-expiration audit rights; review the exact clause language before assuming the right has expired.

What happens if a landlord ignores a CAM dispute letter?

In most leases, ignoring a formal dispute letter does not make it go away — it can be treated as an admission or create grounds for the tenant to withhold the disputed amount. In California, ignoring a written documentation request from a qualifying SB 1103 tenant creates civil liability: the tenant can file suit and courts may award actual damages, statutory damages, attorney's fees, and treble damages if the non-compliance was willful. Outside California, the consequences depend on the lease terms and jurisdiction, but non-response is rarely a neutral outcome.

What is a tenant audit rights clause in a commercial lease?

An audit rights clause gives the tenant the contractual right to inspect the landlord's books and records supporting CAM charges for a defined period after the reconciliation statement is delivered — typically 12 to 36 months. The clause usually specifies what records must be made available, how much notice the tenant must give, whether the audit can be conducted by a third party, and under what conditions the landlord must pay the tenant's audit costs. Some clauses require the tenant to pay audit costs unless the findings exceed a threshold (often 3–5% of billed charges).

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