10/21/2026
As we enter Q4, with 2027 just around the corner, it’s a good time for a refresher on a common commercial lease process: reconciliations of tax, insurance and common-area-maintenance (CAM) charges.
In triple-net leases, tenants pay throughout the year the estimated charges for their pro-rata share of CAM, insurance and property taxes, in addition to their base rent. Once the year closes and actual costs are known, these estimated payments are reconciled against the actual costs. If tenants ended up paying more than their pro-rata share, they receive a credit; if they paid less than their pro-rata share, they are charged for the difference.
Reconciliations matter because they protect both the owner and the tenants. Owners make their best estimates at the start of each about the cost of insurance, property taxes and CAM. But estimates are just that: a guess. And each of these costs can shift before the year is over. Without an accurate reconciliation, owners could end up absorbing costs that should have been shared across tenants. Alternatively, tenants could end up overpaying if the property’s costs dropped during the year – an idea that may sound crazy in our modern world but actually happened to some of White-Spunner Realty’s tenants just last year, thanks to extensive work by our team to find quality vendors at reasonable rates.
The reconciliation process is not a sign that something went wrong; rather it’s simply the process for getting estimated costs trued up to match actual costs. This keeps the number accurate for everyone with a stake in the property, both owners and tenants.
