CAM Reconciliation

CAM reconciliation is the yearly settling-up of common area maintenance charges. Throughout the year, tenants in an NNN lease pay estimated monthly CAM based on the landlord's budget. After year-end, the landlord tallies actual operating expenses for the common areas and reconciles them against what was collected. If actual costs exceeded estimates, the tenant owes the difference; if estimates were too high, the tenant receives a credit. This is where CAM disputes most often arise. Tenants should confirm their lease grants the right to audit the reconciliation, check that only permitted expenses are included (capital improvements and certain costs are often excludable), and watch for administrative fees layered on top. Negotiating a cap on annual CAM increases at lease signing limits exposure to surprises. For a healthcare practice managing tight margins, reviewing the reconciliation each year — rather than paying it automatically — can recover meaningful amounts and prevent improper charges from compounding.

CAM reconciliation is where estimated charges meet reality, and where overcharges hide. Reviewing it annually, with audit rights in place, protects a practice from paying more than it owes.

A tenant pays $12,000 in estimated CAM over the year. The landlord's reconciliation shows actual shared costs came to $13,500, so the tenant owes $1,500 — but an audit reveals an improperly included roof replacement, reducing the balance.