What is True-Up?

Definition

A true-up is the year-end financial adjustment that settles the difference between estimated CAM charges collected from tenants during the year and the actual operating expenses incurred. If actual expenses exceed estimates, tenants owe an additional payment; if estimates exceeded actuals, the landlord issues a credit or refund. The true-up is documented in the reconciliation statement and represents the financial outcome of the CAM reconciliation process. Large true-up amounts — whether charges or credits — indicate that the original estimates were inaccurate, which creates cash flow disruption for tenants and can damage the landlord-tenant relationship. Best practice is to maintain estimates within 5-10% of actual expenses to minimize true-up impact and reduce tenant complaints.