Tenant Lease Audit Checklist: 20 Items to Review Before You Pay CAM

Tenant Lease Audit Checklist: How to Use It

This checklist works at two levels:

Level 1: Annual reconciliation review. Each year when you receive your CAM reconciliation, use this list to check whether the charges appear consistent with your lease. You are not auditing invoices. You are auditing the structure and math of what was billed.

Level 2: Pre-audit screening. Before you decide whether to engage a formal auditor, run this checklist. Items where you find discrepancies or cannot verify are your audit targets. A checklist that surfaces $40,000+ in potential issues justifies a full engagement.

Use this alongside the lease clause audit checklist, which focuses on lease language risk, versus this checklist's focus on billing verification.

The 20-Item Tenant Lease Audit Checklist

Pro-Rata Share & Denominator

Item 1: Verify your rentable square footage

Pull the lease definition of your rentable area. Compare to the square footage used in the reconciliation.

• Does the reconciliation use the same square footage as your lease?
• Has the space been modified (expansion, contraction, partial surrender)?
• If the space changed, is the effective date consistent with the charge period?

Item 2: Verify the denominator

The denominator determines your share of the total expense pool. This is where landlords most commonly make errors.

• What denominator did the landlord use? (Find this in the reconciliation or request it specifically.)
• What does your lease define as the denominator? (Total GLA? Occupied sf? Leasable sf?)
• Does the landlord's denominator match the lease definition?
• Calculate your pro-rata share independently: your sf ÷ denominator = __%
• Does that percentage match what the landlord applied?

Even a small denominator error compounds. If your lease covers 15,000 sf in a 200,000 sf building (7.5%), but the landlord used 185,000 sf as the denominator (8.1%), you're paying 8% more than you should be on every expense.

Use the pro-rata share calculator to verify the math.

Item 3: Anchor tenant exclusions

If your building has anchor tenants (common in retail), check whether their space is excluded from the denominator.

• Does your lease address anchor exclusions?
• If anchor space is excluded from the denominator, is it also excluded from the expense pool?
• Is the anchor exclusion creating a misalignment between expenses and denominator?

For detail on this specific issue, see the anchor exclusion CAM guide.

Gross-Up Provisions

Item 4: Was gross-up applied?

Gross-up adjusts variable expenses to reflect what they'd be at full occupancy.

• What was the building's actual occupancy rate during the audit period?
• Did the landlord gross up any expenses?
• Does your lease permit (or require) gross-up?
• Did the landlord document the occupancy percentage used?

Item 5: Gross-up methodology verification

If gross-up was applied:

• What occupancy percentage did the landlord use?
• Is that percentage consistent with the occupancy schedule?
• Which expenses were grossed up? Are those expenses actually variable (i.e., would they increase with occupancy)?
• Check the math: Grossed-up expense = Actual expense ÷ Actual occupancy %

Example: If janitorial was $180,000 and the landlord says the building was 80% occupied:

• Grossed-up = $180,000 ÷ 0.80 = $225,000
• But if actual occupancy was 87%, the correct grossed-up amount = $180,000 ÷ 0.87 = $206,897
• Difference: $18,103 on this one line item alone

See the CAM gross-up calculation guide for the full methodology.

Item 6: Occupancy floor check

Some leases include a floor: "gross-up applies only if occupancy is below X%."

• Does your lease have an occupancy floor for gross-up?
• Was occupancy actually below that floor during the audit period?
• If gross-up was applied when occupancy was above the floor, that's an overcharge.

Exclusion List Verification

Item 7: Executive compensation

• Does your lease exclude above-property-level executive salaries?
• Did the landlord include any corporate-level allocations in operating expenses?
• If salaries are charged, are they limited to on-site property staff?

Item 8: Capital expenditures

• Does your lease exclude capital expenditures? Or permit only amortized capex?
• Are there any large one-time items in this year's reconciliation? (HVAC system, roof, parking lot repaving, elevator modernization)
• If capex is permitted, is it amortized over the correct useful life?

Amortization check example: A $180,000 roof replacement should amortize at $180,000 ÷ 20 years = $9,000/year. If the landlord billed $180,000 in one year, the overcharge is $171,000 at the property level (your share depends on your pro-rata percentage). On a 10% share, that's $17,100 in a single year.

Item 9: Leasing costs

• Does your lease exclude leasing commissions, brokerage fees, and tenant improvement allowances?
• Do any line items in the reconciliation resemble leasing activity costs?

Item 10: Other tenant's costs

• Does your lease exclude costs that primarily benefit other tenants?
• Were there any tenant-specific improvements or services in the building that year?
• Are those costs properly excluded from the shared pool?

Item 11: Insurance and warranty recoveries

• If the landlord received insurance proceeds or warranty payments for repairs, were those costs excluded from the expense pool?
• Look for major repair items. If a covered loss was repaired and included in CAM but insurance paid the landlord, you may have funded the deductible through CAM inappropriately.

Management Fee & Administrative Costs

Item 12: Management fee cap

• What does your lease allow as a management fee? (Percentage, capped at what rate, on what base?)
• What fee did the landlord charge?
• What base did the landlord apply the percentage to?

Example: Your lease says "management fee not to exceed 4% of operating expenses." The landlord charged 4% of gross revenues (including base rent). On a $500,000 annual base rent + $250,000 operating expenses:

• Allowed fee: 4% × $250,000 = $10,000
• Charged fee: 4% × $750,000 = $30,000
• Overcharge: $20,000

Item 13: Administrative surcharge double-billing

• Is there both a management fee and a separate "administrative" or "overhead" charge?
• Do these cover the same or overlapping services?
• Does your lease permit both?

Capital Expenditure & Depreciation

Item 14: Depreciation check

• Does your lease exclude depreciation?
• Review the operating expense categories. Does any item look like depreciation (consistent annual amounts for assets described in prior-year statements)?

Item 15: Renovation and improvement costs

• Were there any building-wide renovations during the audit period?
• Are those renovation costs showing up in operating expenses?
• Does your lease permit renovation costs as operating expenses, or are they capital items?

Insurance & Taxes

Item 16: Insurance allocation

• Does the landlord carry portfolio-wide insurance?
• Is the allocation to your property at an allocated rate or at market cost?
• Request the premium invoice and verify the total premium divided by the property's share of total portfolio value matches what you're paying.

Item 17: Real estate tax exclusions

• Does your lease exclude special assessments, transfer taxes, or taxes relating to other properties?
• Are any such items included in the tax line of the reconciliation?
• If the landlord is protesting the tax assessment, are protest costs being appropriately handled?

Year-Over-Year Comparison

Item 18: Year-over-year variance analysis

Compare this year's reconciliation to the prior year by line item.

• Which categories increased by more than 10%?
• Is there an explanation for large increases? (Vendor contract renewal at higher rate? Major repair? Higher occupancy?)
• Are there new line items that didn't appear in prior years?
• Did any categories decrease dramatically? (This can indicate a correction, which may mean prior years were overbilled.)

Audit Rights Administration

Item 19: Audit deadline check

• When did you receive this reconciliation?
• What is your audit deadline per the lease?
• Have you calendared that deadline?

Most audit deadlines are 12–24 months from receipt of the reconciliation statement. Missing them means waiving your right to challenge those charges. See tenant audit rights guide for a complete breakdown of notice and timing requirements.

Item 20: Prior-year audit status

• Were there any unresolved disputes from prior years?
• Has the landlord corrected previously identified errors in the current reconciliation?
• If credits were agreed upon, are they reflected in the current statement?

Interpreting Your Results

0–3 items flagged: Reconciliation appears consistent with your lease. File and monitor next year.

4–7 items flagged: Multiple areas warrant closer review. Consider requesting documentation on the flagged items before deciding whether to proceed to a formal audit.

8+ items flagged: Strong candidate for a full audit. The number of flags suggests systemic issues, not isolated errors. Calculate the potential dollar recovery using the CAM billing error estimator before committing to a formal engagement.

Next Steps

If this checklist surfaces issues:

1. Document each flag with specific lease language and the discrepancy you observed
2. Use the commercial lease expense audit guide to structure the next-level review
3. Review the top 15 CAM billing errors to see how your findings compare to common patterns
4. If you decide to proceed formally, see tenant audit rights guide for notice requirements

If you're negotiating lease terms, see the CAM exclusions negotiation guide to fix the problematic provisions before you're bound by them.

Sources

1. RIW - Audit rights and restrictions
2. J.P. Morgan - What Are CAM Charges in CRE?