The difference between what a tenant paid in estimated monthly CAM installments during the year and the actual expenses allocated to that tenant at year-end. A positive variance means you owe additional money; a negative variance means you are owed a credit.
Reconciliation variance equals actual allocated expenses minus total estimated payments made during the period. Landlords calculate this by determining the tenant's proportionate share of actual operating expenses, then subtracting the sum of monthly estimates collected. Material variances (often exceeding 10-15% of estimates) may indicate that estimates were set too low to generate large year-end bills, or that unexpected expenses were added to the pool.
A landlord deliberately sets low monthly estimates to make the space appear affordable, then hits the tenant with a large year-end reconciliation bill. The variance is technically correct, but the estimating practice creates cash flow problems and obscures the true cost of occupancy.
Track your reconciliation variance year over year. Consistent large positive variances suggest the landlord is underestimating deliberately. Request that estimates be adjusted to reflect actual costs, and audit the underlying expenses that caused the variance.
Worried about reconciliation variance in your lease?
Need to extract lease terms before your audit?
A CAM audit is only as accurate as your lease data. lextract.io extracts 126 structured fields from any commercial lease PDF: CAM definitions, pro-rata share, caps, base year, and audit rights. So you have the exact terms your landlord is supposed to follow.
Go to lextract.ioUpload two PDFs. 14 detection rules. Under 15 minutes. Free.
Find My OverchargesThis 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.
