What the reconciliation is
Most commercial leases bill estimated CAM, tax and insurance charges monthly, then true them up once a year. The landlord totals the building's actual costs, applies your share and bills or credits the difference. Every step of that calculation is set by the lease, and every step can go wrong.
The errors that recur
- Pro-rata share: your area divided by the wrong denominator, often after a building expansion or when vacant space is left out.
- Gross-up applied to costs that do not vary with occupancy, such as insurance or security.
- Capital expenditures billed as operating costs instead of being excluded or amortised as the lease requires.
- Management or administrative fees above the cap, or charged on top of costs that already include them.
- Controllable-expense caps ignored when the year-over-year increase exceeds the agreed limit.
- Costs the lease excludes: leasing commissions, landlord legal fees, costs for other tenants' spaces.
Requesting the backup
Ask for the general ledger detail behind each pool, the denominator used for your share, and any gross-up calculation. Put the request in writing and keep the date: many leases give a limited window, measured from delivery of the statement, to object or to audit.
Raising the dispute
Quote the lease clause, show the landlord's figure, show the corrected figure and state the amount. One letter per year per location keeps it clean. If the lease has an audit-cost shifting clause, note whether the overcharge passes its threshold.
For a portfolio, the same landlord often makes the same error at several sites. Check every lease with that landlord once you find one.
Updated November 5, 2026