What we check
Five tests, and what they do not cover
“Landlords commonly make mistakes in computing these charges and they’re usually in the landlord’s favor,” says legal publisher Nolo.3 Most are not bad faith. They are spreadsheet habits applied across fifty tenants with fifty different leases. Yours is the only one we read.
Controllable costs against your cap
What was billed, against the ceiling your cap builds from the base year — cumulative, compounding, annual, or no cap at all, whichever your lease says.
Management fee against its cap
The fee billed, against your lease’s percentage applied to the controllable costs your cap allows plus the taxes, insurance, and utilities billed. If your lease charges the fee on a different base, check it yourself.
Capital items billed in full
Roofs, parking lots, HVAC replacements. If your lease allows them at all, they are usually amortized rather than charged to one year.
Pro-rata share
The share the landlord billed you at, against your square footage over the building’s. A denominator that quietly shrinks raises every line you pay. Needs the share from your statement.
Gross-up for vacancy
If the occupancy on your statement is below 95%, an estimate of what grossing up would add to your share, assuming 60% of controllable costs vary with occupancy. Many leases allow a gross-up, so check your lease’s gross-up clause before you raise it. Needs the occupancy figure from your statement.
These five are what the arithmetic tests. It does not test costs your lease excludes, taxes and insurance, an administrative fee stacked on a management fee, or anything else on the statement — and it reads the figures you enter, not the statement itself. It is five tests against your lease terms, not a full audit of your reconciliation.
The window on this year’s statement is already running.
Run the free checkSources
- Cushman & Wakefield, “Top 5 Things to Know About Lease Audits,” Jan 13, 2020: “Most leases allow tenants to review the annual CAM reconciliations within 30 to 180 days of the date the tenant receives the landlord’s statement.” Nolo gives the same range.
- Rubin & Firenze (New York Life Real Estate Investors), AFIRE Summit Journal, Mar 8, 2024, using the NCREIF Property Index, Q2 2019 to Q2 2023: insurance expense +107% office, +105% retail, +117% industrial.
- Nolo, “What Is a Lease Audit?” updated Sept 11, 2023: “Landlords commonly make mistakes in computing these charges and they’re usually in the landlord’s favor.”
- Arithmetic: $0.50 per sq ft × 30,000 sq ft = $15,000 per year. Example used by a tenant-rep broker in National Real Estate Investor, Aug 18, 2010.