Most Florida commercial leases bill operating expenses — common area maintenance (CAM), taxes, and insurance — as a monthly estimate, then reconcile once a year against actual costs. That year-end reconciliation is where a surprise "true-up" bill appears, and it is also where landlord accounting errors, mis-allocated capital items, and inflated gross-ups quietly get passed through. A commercial lease, unlike a residential one, has no statutory safety net; your only protection is the language of the lease and your willingness to check the math. This guide walks through the order I use to audit a CAM reconciliation. For the underlying clauses that make an audit possible, see the companion article on the six operating-expense clauses that decide what a Florida commercial tenant really pays.
Gather before you audit
- • Your fully executed lease, including all amendments and exhibits.
- • The current-year reconciliation statement and the prior two years for comparison.
- • Your monthly estimated CAM invoices for the reconciled year.
- • The operating-expense definition, exclusions, cap, and audit-rights clauses.
- • The stated base year and your pro rata share percentage.
Red flags to watch for
- • A capital item — roof, parking lot, HVAC — expensed in full in one year.
- • Management fees stacked on top of administrative overhead.
- • A gross-up applied to expenses that do not vary with occupancy.
- • A pro rata share that rose without your square footage changing.
- • A reconciliation for a year that closed more than a year ago.
Step 1: Confirm the deadline and preserve your audit right
Before anything else, find the audit-rights clause and calendar its deadlines. Most leases give the tenant a limited window — often 60 to 120 days after the reconciliation statement — to request backup documentation and dispute the numbers. Miss that window and the statement is usually deemed accepted. Send a written request to inspect the books within the window, even if you have not finished your analysis. Preserving the right costs nothing; losing it forfeits the entire audit.
Step 2: Recompute your pro rata share
The reconciliation multiplies total operating expenses by your pro rata share, so an error in the fraction infects every line. Confirm the numerator (your rentable square footage) against the lease, and confirm the denominator. If the landlord used leased area rather than total leasable area, your percentage is inflated, because a smaller denominator raises your share. A share that changed year over year without a change to your space is the single most common — and most recoverable — error.
Step 3: Test each line against the exclusion list
Take the reconciliation line by line and hold each item against the lease's exclusion clause. Capital improvements, structural repairs to the roof and foundation, correction of construction defects, leasing commissions, and costs reimbursed by insurance should not appear in the pass-through at all. If a capital item is properly includable, confirm it was amortized over its useful life rather than expensed in full. The parking-lot and HVAC replacements are where the biggest overcharges hide.
Step 4: Check the cap and the controllable split
If your lease caps annual increases, separate the controllable expenses (CAM line items) from the uncontrollable ones (taxes, insurance) and test only the controllable total against the cap. Watch for a landlord applying an unused prior-year increase to the current year — a cumulative cap effect — when the lease provides only a non-cumulative annual cap. Any controllable increase above the capped percentage is a billing error.
Step 5: Scrutinize the gross-up
If the building was not fully occupied, the landlord may have grossed up variable expenses to a stated occupancy assumption. Confirm the gross-up was applied only to expenses that genuinely vary with occupancy, and only to the percentage the lease allows. A gross-up applied to fixed costs, or pushed above the contractual occupancy assumption, recovers more than the landlord actually spent.
Step 6: Document the discrepancy and demand the remedy
Put your findings in a written objection that quotes the lease clause, states the correct figure, and shows the difference. Many audit clauses require the landlord to issue a credit — and to pay the cost of the audit — when the overcharge exceeds a stated threshold, often three to five percent. Send the objection within the dispute window, keep the reconciliation open until it is resolved, and escalate to the lease's dispute-resolution provision only if the landlord will not correct a documented error.
Soft next step
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