CAM reconciliation, explained
CAM reconciliation is the annual true-up between what a landlord actually spent on common-area maintenance — and usually real-estate taxes — and what tenants paid in estimated monthly charges. At year-end you total the real costs, apply each lease’s rules, work out every tenant’s pro-rata share, and bill or credit the difference. It’s detailed, deadline-driven work most teams do once a year, and a single wrong share or missed base year can cost real money.
Gather the building's actual common-area maintenance costs for the reconciliation year from your general ledger or year-end operating statement, and total real-estate taxes separately — CAM and tax are usually reconciled as two streams.
Every lease defines what counts. Remove non-includible costs (often capital items, leasing commissions, or landlord-side expenses) and apply any caps or gross-up provisions the lease grants before allocating.
Divide each tenant's leasable square footage by the property's total to get their pro-rata share, then apply that percentage to the includible pool. Watch for shares stated against a building versus the whole property.
For base-year or expense-stop leases, subtract the tenant's base-year amount so they only pay the increase over that baseline — not the full share.
Subtract what the tenant already paid in estimated monthly CAM from what they actually owe. A positive number is a balance due; a negative number is a credit.
Issue each tenant a reconciliation (true-up) letter showing the pool, their share, what they were billed, and the balance or credit — with backup detail if the lease grants audit rights. Watch the lease's notice deadline; miss it and you can forfeit the right to bill.
Prop Easy includes CAM reconciliation and tenant letters on every paid plan — no separate tool, no extra line item. You enter the year’s expense pools (or import a report), it computes each tenant’s share from their leasable area and lease terms — pro-rata, base years, caps, and gross-up — and generates the tenant reconciliation letters with backup detail. It’s validated to tie out to your existing reconciliation to the cent, so you can trust the numbers rather than re-checking them. The same tenants’ CAM terms can come straight from a lease abstract you already ran.
CAM reconciliation is the annual process of comparing what a landlord actually spent on common-area maintenance — and usually real-estate taxes — against what tenants were billed in estimated monthly payments, then charging or crediting each tenant for the difference based on their pro-rata share and lease terms.
CAM stands for Common Area Maintenance: the shared operating costs of a commercial property, such as landscaping, parking-lot upkeep, security, janitorial, and management, that tenants reimburse the landlord for under their leases.
Most leases use a pro-rata share: the tenant's leasable square footage divided by the property's total leasable square footage. That percentage is applied to the includible expense pool. Base-year or expense-stop leases then subtract a baseline so the tenant pays only the increase over their base year.
It varies by lease, but most require the landlord to deliver the reconciliation within a set window after year-end — commonly 90 to 180 days. Many leases bar recovery of amounts not billed by the deadline, so timing matters.
In a base-year (or expense-stop) lease, the tenant is responsible only for the increase in expenses over a fixed baseline — the base-year amount or the stop — rather than their full pro-rata share of the whole pool.
Yes. CAM reconciliation and tenant letters are included on every Prop Easy paid plan at no extra cost. It computes each tenant's share from your actual expenses and their lease terms, generates the tenant letters, and is validated to tie out to your existing reconciliation to the cent. A standalone tool for this often runs $2,000+ per year.
CAM reconciliation and tenant letters are included on every paid plan. Start free and see it tie out on your own building.