Throughout the year, tenants pay estimated CAM (and other recoverable expenses) based on the prior year or a budget. After the year closes, the landlord calculates each tenant’s pro-rata share of the actual recoverable expenses and compares it to what the tenant was billed. The difference — the "true-up" — is billed as an additional charge if the tenant underpaid or issued as a credit if they overpaid. This annual reconciliation is also called a CAM reconciliation or expense reconciliation.
How a true-up works
The reconciliation follows a consistent sequence:
- Total the actual recoverable expenses for the year
- Apply each tenant’s pro-rata share, with caps and exclusions
- Compare that share to what the tenant was billed in estimates
- Charge the shortfall or credit the overage
Why true-ups cause disputes
True-ups are a common friction point because tenants scrutinize whether expenses were properly recoverable, whether caps were honored, and whether the math ties out. Transparent, auditable statements that trace each charge back to source invoices prevent most disputes.
A tenant paid $20,000 in estimated CAM during the year. Their pro-rata share of actual recoverable expenses turns out to be $22,500, so the landlord bills a $2,500 true-up charge. If actuals had been lower, the tenant would have received a credit instead.