Prorated
Prorated means using a daily rate or stated allocation method to divide a charge by the portion of time, space, or expense that applies. The prorated definition in a commercial lease usually matters when rent, CAM estimates, tax charges, insurance, or credits cover only part of a month, part of a lease year, or part of a tenant occupancy period.
Firm Impact
Prorated meaning questions become audit work when a client starts or ends occupancy mid-period, receives a partial-year CAM reconciliation, or changes square footage during the lease year. Firms should test whether the landlord used the correct daily rate, actual days, lease year, and pro-rata share before accepting a prorated rent or CAM charge.
How This Gets Abused
A tenant opened on March 18, but the landlord charged a full month of prorated rent and CAM using a 30-day month convention without checking the lease. The lease required actual days, so the March charge should have covered 14 days, not a full monthly estimate. The same error carried into the annual reconciliation.
Practitioner Note
Separate time proration from pro-rata share. Proration answers how much of a billing period applies, while pro-rata share answers what percentage of the property expense pool belongs to the tenant. For a partial-year CAM audit, calculate the daily rate first, apply the actual days or 30-day month convention required by the lease, then apply the tenant share if the charge is allocated across tenants.
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