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What is CAM Reconciliation? A Complete Guide for Property Managers

By Angel Campa, Founder, CAMAudit

Quick Answer

CAM reconciliation is the annual process of comparing estimated common area maintenance charges to actual expenses. As a commercial tenant, you pay monthly estimates throughout the year, then receive a reconciliation statement showing whether you owe additional money or are due a refund based on actual costs.

Common Area Maintenance (CAM) charges are a significant expense for commercial tenants. Understanding how CAM reconciliation works is essential for managing your occupancy costs and ensuring you're not overcharged. This guide explains everything you need to know about the CAM reconciliation process.

What Are Common Area Maintenance (CAM) Charges?

CAM charges are the tenant's proportionate share of operating expenses for maintaining common areas in commercial properties. These areas include lobbies, hallways, parking lots, landscaping, and shared facilities that benefit all tenants.

Typically Included

  • • Property taxes
  • • Property insurance
  • • Maintenance & repairs
  • • Landscaping & snow removal
  • • Security services
  • • Common area utilities

Often Excluded

  • • Capital improvements
  • • Leasing commissions
  • • Legal fees for disputes
  • • Marketing costs
  • • Above-market mgmt fees
  • • Owner-specific expenses

How Does CAM Reconciliation Work?

1

Monthly Estimates

You pay estimated CAM charges monthly based on the landlord's budget projection.

2

Year-End Calculation

Landlord tallies actual operating expenses at year end.

3

Pro Rata Allocation

Your share is calculated based on your rentable square footage percentage.

4

Reconciliation Statement

Statement shows estimated vs. actual, with adjustment amount.

5

Settlement

You either pay the shortfall or receive a credit/refund for overpayment.

Why Is CAM Reconciliation Important for Tenants?

  • CAM charges can represent 20-40% of total occupancy costs
  • Billing errors in CAM statements are common — overcharges go uncontested when no one reviews the math
  • Understanding reconciliation helps you budget accurately
  • You have legal rights to audit and dispute charges
  • Proper tracking prevents overpayment year after year

What Are Common CAM Reconciliation Issues?

Calculation Errors

Incorrect pro rata shares, math errors, or wrong base year figures.

Improper Inclusions

Capital expenses or excluded items charged as operating expenses.

Gross-Up Mistakes

Incorrect occupancy percentages or applying gross-up to non-variable expenses.

CAM Cap Violations

Exceeding contractual caps or miscalculating cap application.

Frequently Asked Questions

What is CAM reconciliation?

CAM reconciliation is the annual process of comparing estimated common area maintenance (CAM) charges paid by commercial tenants to the actual expenses incurred by the landlord. The difference results in either a refund to the tenant or an additional charge.

How often is CAM reconciliation performed?

CAM reconciliation is typically performed annually, usually within 90-120 days after the calendar year or lease year ends. Some leases may specify different reconciliation periods.

What expenses are included in CAM charges?

Common CAM expenses include property taxes, insurance, maintenance and repairs, landscaping, snow removal, security, utilities for common areas, property management fees, and administrative costs. The specific inclusions depend on the lease terms.

What is a CAM cap and how does it work?

A CAM cap limits the maximum amount landlords can charge tenants for CAM expenses. Caps can be cumulative (compound) or non-cumulative, and typically allow 3-5% annual increases. Caps protect tenants from unexpected expense increases.

What is gross-up in CAM reconciliation?

Gross-up adjusts variable operating expenses to reflect what they would be if the building were at a specified occupancy level (usually 95%). This ensures fair cost distribution when a building has vacancies.

How can tenants audit their CAM charges?

Tenants have the right to audit CAM charges, typically within 1-2 years of receiving the reconciliation statement. This involves reviewing landlord records, invoices, and calculations to verify accuracy. Software like CAMAudit can automate this process.

Automate Your CAM Reconciliation Review

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