5 Places CAM Reconciliations Go Wrong (and How to Catch Them)

CAM reconciliation is a once-a-year job, which is exactly why a small mistake can sit for months. The math isn't the hard part, the lease terms are. Miss one baseline or one denominator and a tenant gets billed wrong, then disputes it later, right when you've moved on to other things.

Here are the five places reconciliations most often go wrong, and a quick way to catch each one before letters go out.

1. Billing the wrong baseline on a base-year lease

On a base-year lease, the tenant doesn't pay their full share of expenses. They pay their share of the increase over a fixed baseline: the expenses in their base year. The base year is set once, when the lease is signed, and it doesn't change. Say the base year is 2024. Every year after that, you bill the tenant's share of whatever the expenses run above the 2024 amount. The costly mistake is billing a base-year (or expense-stop) tenant their full pro-rata share of the pool, as if there were no baseline at all.

The check: for every base-year lease, make sure you subtracted the base-year amount before applying the tenant's share. If a base-year tenant's bill looks like a straight percentage of the whole pool, something's off.

2. Pro-rata against the wrong denominator

A tenant's share is usually their square footage divided by the property's total. The trap is a share that was written against one building getting applied across the whole property, or the other way around.

The check: add up every tenant's pro-rata share. If they total much more than 100%, a denominator is wrong somewhere. Find it before you bill.

3. Sweeping in costs the lease doesn't allow

Capital improvements, leasing commissions, and landlord-side costs usually aren't recoverable, but they slip into the pool when you total the GL without filtering.

The check: go through the includable pool line by line against each lease's inclusion and exclusion language. One lease's carve-outs won't match the next.

4. Gross-up done wrong, or skipped

When a building isn't full, many leases let you gross up the variable expenses to what they'd have been at full occupancy, so each tenant pays a fair share and the landlord isn't stuck covering the vacancy. Two things go wrong here: skipping gross-up when the lease allows it, or grossing up fixed costs that shouldn't move with occupancy at all.

The check: gross up only the variable expenses, and only to the occupancy level the lease specifies.

5. Missing the notice deadline

Many leases give the landlord a set window after year-end to deliver the reconciliation, often 90 to 180 days, and some won't let you recover anything billed after that.

The check: at the start of the year, calendar every lease's reconciliation deadline. Getting the math right doesn't help if you've already lost the right to bill it.

What ties these together

All five live in the lease terms, not the spreadsheet. Get the recovery method, pro-rata share, caps, the base year, and gross-up rules captured correctly once, ideally right in the lease abstract, and reconciliation turns into data entry instead of a research project.

Quick pre-billing checklist

• Base-year and expense-stop leases: baseline subtracted before applying the share
• All pro-rata shares total about 100%, not more
• Includable pool checked line by line against each lease's exclusions
• Gross-up applied only to variable costs, only to the specified occupancy
• Every lease's notice deadline calendared

This is why Prop Easy calculates each tenant's share straight from their lease terms and actual expenses, drafts the tenant letters, and is checked to tie out to your existing reconciliation to the cent. The full step-by-step is in our guide to CAM reconciliation.

CAM reconciliation and tenant letters come with every paid plan. You can start free with 3 abstracts and see it tie out on one of your own buildings.