CAM, recoveries and the reconciliation

Common-area maintenance and other recoverable costs are billed to tenants as estimates during the year, then trued up in the annual reconciliation: actual recoverable expenses, each tenant's pro-rata share, estimates already paid, and the balance due or credited.

Most disputes trace to the lease, not the math: exclusions (capital items, leasing costs), caps (e.g., controllable CAM growth limited to 5%), gross-up clauses (normalizing variable costs to full occupancy so a half-empty building doesn't under-recover), and base years in gross leases. A reconciliation that cannot cite the clause behind each adjustment will lose the argument.

Operationally: keep recoverable and non-recoverable costs coded separately all year, reconcile within the deadline the lease sets (some leases void late billings), and keep the workpapers — next year's auditor, buyer or tenant will ask.