CAM Reconciliation Process for Commercial Landlords: A Step-by-Step Guide

Before exporting anything, the GL must be complete and accurate for the full reconciliation year. Incomplete accruals are the most common source of restatements and tenant disputes.

• Verify all vendor invoices for the year are received and accrued — especially December invoices that arrive in January.
• Confirm property tax and insurance premiums are fully booked to the correct accounts for the entire year.
• Reconcile bank statements to confirm no property-level disbursements are missing from the GL.

Export the full general ledger for the property from your property management system. The raw export almost always requires cleaning before it can be used for reconciliation calculations.

• Confirm the date range exactly matches the lease year — a single day off creates an irreconcilable gap.
• Remove corporate-level allocations, inter-company transfers, and any non-property items that landed in the property GL.
• Run a duplicate-entry check — Yardi and MRI both have known edge cases where voided-and-re-entered invoices can appear twice.

See the full GL export QA checklist for a complete list of checks.

Expense classification is where most reconciliation errors originate. Every GL line must be evaluated against the lease before it enters the recoverable pool.

• Identify non-recoverable expenses: capital improvements, financing costs, depreciation, leasing commissions, and tenant-specific work.
• Flag repair and maintenance items above your capital threshold (typically $5,000–$10,000) for review — they may be capitalized and therefore excluded.
• Apply lease-specific exclusions for each tenant — some leases exclude management fees, others exclude landscaping or security.

After classifying expenses, three adjustments may apply before you can calculate each tenant's share: gross-up, CAM caps, and management fee calculation.

• If occupancy fell below the gross-up threshold (typically 90–95%), normalize the variable portion of recoverable expenses to the threshold occupancy level.
• Apply CAM caps — determine whether each cap is cumulative or non-cumulative and calculate the maximum allowable obligation for each capped tenant.
• Calculate the management fee at the contracted rate on the correct base, and verify it does not exceed any per-lease management fee cap.

Each tenant gets a reconciliation statement showing how their share was calculated, what they paid in estimates, and the net true-up amount.

• Produce a per-tenant calculation showing: total recoverable pool, gross-up adjustment, cap adjustment, pro-rata share percentage, gross obligation, prior-year estimates collected, and net true-up.
• Attach supporting schedules: expense detail by category, management fee calculation, pro-rata share schedule, and gross-up workbook (if applicable).

Use the pre-send packet checklist before delivering statements to tenants.

Delivery triggers the tenant's payment obligation. From this point, the reconciliation process becomes a collections and dispute management workflow.

• Deliver statements via the method required by each lease (certified mail, email, or tenant portal), and document delivery confirmation.
• Track payment deadlines per tenant — most leases give 30 days to pay after statement delivery.
• Monitor for tenant disputes — a tenant questioning the statement is different from a tenant not paying; handle each track separately.

Most tenants will ask clarifying questions. Some will invoke their audit rights. A well-organized reconciliation file makes both situations manageable.

• Answer general questions about expense categories and calculations within the SLA specified in your lease (typically 15–30 business days).
• For formal audit requests, assemble the audit defense packet: GL export, vendor invoice index, management fee workbook, pro-rata schedule, and cap bank schedule.
• Track all open inquiries and document every response — this paper trail is essential if a dispute escalates to litigation.