The year-end calculation that compares estimated CAM payments collected from tenants during the year against actual expenses incurred. If estimates exceeded actuals, tenants receive a credit. If actuals exceeded estimates, tenants owe an additional payment. The true-up is the core of the annual CAM reconciliation process.
The true-up (also called year-end reconciliation or annual adjustment) is the arithmetic settlement between estimated monthly CAM installments paid by tenants and the tenant's actual pro-rata share of audited operating expenses. The formula is: (actual total CAM expenses multiplied by tenant's pro-rata share percentage) minus (total estimated payments collected during the year). A positive result means the tenant owes additional rent; a negative result means the tenant is owed a credit or refund. Most leases require landlords to deliver the true-up statement within 90 to 180 days of the lease year end.
A landlord consistently set annual CAM estimates 30% below actual costs, then billed large true-up amounts in Q1 of the following year. This created cash flow pressure on tenants and shortened the effective time to audit because the audit deadline clock started when the reconciliation was delivered, but the true-up payment was due in 30 days.
Track your monthly CAM estimates against your lease's pro-rata share of prior-year actuals. If estimates are suspiciously low, you are likely to face a large true-up bill. Request mid-year expense updates from your landlord and set aside reserves so the year-end adjustment does not create a cash crunch.
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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.
