The 12-month period used as the accounting basis for CAM reconciliations, which may or may not align with the calendar year. The lease year defines when annual reconciliation obligations begin and end.
If the lease year does not match the calendar year (January 1 – December 31), the landlord's annual operating expenses must be properly apportioned to the correct lease year. Misaligning lease year and calendar year can result in tenants paying for expenses in the wrong period.
A lease with a July 1 – June 30 lease year. During the year-end reconciliation, the landlord included expenses through August 31 (the calendar quarter end) instead of June 30 - adding two months of unearned expenses to the reconciliation.
Confirm which definition of 'lease year' your lease uses and verify that the reconciliation statement covers exactly that 12-month period.
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Start Free AuditThis page provides general educational information. It is not legal advice and may not reflect the most current law in your state. Consult a licensed attorney for advice specific to your situation.