For property accountants, getting Common Area Maintenance (CAM) and other passthrough charges right isn’t just about the numbers—it’s about protecting tenant relationships, maintaining compliance, and ensuring accurate financial reporting. When done incorrectly, CAM reconciliations can lead to disputes, delayed payments, and potential legal trouble. When done right, they preserve trust and streamline the financial management of real estate assets.
Here are six best practices every property accountant should follow to ensure CAM and other passthroughs are handled correctly and professionally.
1. Set Up the Chart of Accounts (COA) for Accuracy and Efficiency
The Chart of Accounts is the foundation of all financial reporting. A well-structured COA enables precise tracking and categorization of recoverable expenses versus non-recoverable ones. Here’s why it matters:
• Proper Grouping: Group expenses in a way that aligns with budget categories and tenant lease definitions. For example, separating “Repairs & Maintenance” into specific categories (HVAC, Roof, Landscaping) makes reconciliations cleaner and justifiable.
• Consistent Classifications: Avoid lump-sum “catch-all” accounts. Instead, break expenses out to match how they are presented to tenants in CAM statements.
• Recoverable vs. Non-Recoverable: Clearly define and consistently apply whether expenses are recoverable under CAM or not. Some companies flag accounts as “R” or “NR” within the COA.
2. Know the CAM Terminology
Understanding CAM terminology is foundational to getting reconciliations right. Here’s a robust glossary to help property accountants speak the same language as asset managers, attorneys, and tenants:
| Term | Definition |
| CAM (Common Area Maintenance) | Shared operating expenses for common areas billed to tenants. |
| Gross-Up | Adjusting variable expenses to simulate full occupancy (usually 95%–100%). |
| Base Year | A reference year used as a benchmark. Tenants pay increases over this base. |
| Expense Stop | A cap on the landlord’s responsibility; costs above this are passed through. |
| CAM Cap | A limit on CAM increases billed to tenants—may be cumulative or compounded. |
| Fixed CAM | A set CAM amount charged regardless of actual expenses. |
| Estimated CAM | Monthly charges based on budgeted CAM, reconciled annually. |
| CAM Reconciliation | Annual true-up comparing estimated vs. actual CAM costs. |
| Pro Rata Share | Tenant’s proportionate share of the total property used to calculate CAM. |
| Capital Expenditure (CapEx) | Long-term improvements. Generally not recoverable unless lease allows. |
| Operating Expense (OpEx) | Ongoing building costs like cleaning and repairs. Usually recoverable. |
| Administrative Fee | Landlord’s fee for managing CAM—typically 10–15%. |
| Management Fee | Cost of property management—may be recoverable depending on lease. |
| Controllable Expenses | Expenses like janitorial or landscaping—often subject to CAM caps. |
| Non-Controllable Expenses | Costs like property taxes and insurance—not usually capped. |
| Exclusions | Items specifically excluded from CAM per the lease. |
| True-Up | Synonym for reconciliation—adjustment made between estimated and actuals. |
| CAM Pool | Total recoverable expense group for a building or segment (e.g., retail CAM pool). |
| Direct Charge | Expense billed directly to one tenant for exclusive services. |
| Net Lease (NNN) | Tenant pays rent plus property taxes, insurance, and CAM. |
3. Understand Lease Structures
Every lease type determines how CAM and passthroughs should be handled. Property accountants must understand the basics of each:
• Triple Net (NNN) Lease: Tenant pays rent plus their share of property taxes, insurance, and CAM. Most passthrough intensive.
• Gross Lease: Tenant pays one flat rent amount; landlord covers all expenses. Few if any CAM reconciliations.
• Modified Gross Lease: Somewhere in between—landlord and tenant split certain expenses, or costs above a defined base year are passed through.
4. Collaborate with Property and Asset Managers
Accounting doesn’t happen in a vacuum. Timely, accurate CAM reconciliations rely on strong communication with:
• Property Managers: To understand service contracts, vendor invoices, building operations, and anomalies in spend.
• Asset Managers: For strategic budget inputs, capital vs. operating cost clarifications, and timing of asset-level decisions.
Regular check-ins during budget season and year-end reconciliation are critical. A shared calendar and workflow system can help maintain alignment.
5. Know the Building Operations
Numbers tell a story, but only if you understand the building’s operations. For example:
• Is the snow removal vendor used for tenant spaces or just the shared lots?
• Is pest control for the exterior only or specific tenant interiors?
• Are utilities submetered, or shared and allocated?
When accountants understand how a building runs, they’re better equipped to determine what should be charged to CAM and what should not.
6. Have a Solid Foundation in GAAP Accounting
CAM reconciliations don’t live in a bubble. They connect to the broader financial picture of the asset. Property accountants must:
• Properly accrue CAM-related expenses
• Match CAM income and expense in the correct periods
• Understand when costs should be capitalized vs. expensed
• Recognize revenue correctly (especially in multi-tenant NNN structures)
Being fluent in GAAP helps ensure not only that tenants are billed correctly but also that financial statements reflect the true economic activity of the asset.
Final Thoughts
CAM reconciliations can be complex, but with the right structure, knowledge, and communication, property accountants can ensure accuracy and transparency—protecting the landlord-tenant relationship and preserving the value of the real estate asset.
Need a Second Set of Eyes on Your CAM Reconciliation?
At CAM Audit Services, we specialize in reviewing CAM and passthrough charges for both landlords and tenants. Whether you’re cleaning up your books or responding to a tenant dispute, we can help.
👉 Visit: https://camauditservices.com/contact
About CAM Audit Services
CAM Audit Services is a passion project founded by a seasoned real estate CFO who also holds CPA and CFA credentials. After reviewing hundreds — if not thousands — of CAM reconciliations over the years, it became clear just how often these calculations are done incorrectly, overlooked, or misapplied. What started as a niche expertise has grown into a mission: to bring order to the chaos, clarity to the numbers, and fairness to tenants and landlords alike.
We specialize in reviewing Common Area Maintenance (CAM), Insurance, and Real Estate Tax pass-throughs — line by line, lease by lease. Whether you’re a tenant looking for transparency or a landlord wanting to ensure accuracy, we’re here to help make sense of it all.
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