What is a CAM reconciliation, and who is responsible for it?

Most commercial tenants pay common area maintenance, sometimes called additional rent or TMI, as a monthly estimate throughout the year, with the landlord squaring the estimate against actual costs afterward. That timing gap is where a business sale can create a genuine dispute over who actually owes what.

Why the timing catches buyers off guard

Landlords typically reconcile CAM once a year, sometimes well after the fiscal period ends. A business sold partway through that period means the reconciliation straddles both owners, and whoever holds the lease when the invoice actually arrives is usually the one the landlord bills, regardless of who occupied the space for which portion of the year.

What the purchase agreement should say about it

A well-drafted agreement allocates any CAM shortfall or credit by the portion of the year each party actually occupied the premises, rather than leaving it to whoever happens to be the tenant when the invoice shows up. Without an explicit clause, the default outcome depends on the lease and can catch either side by surprise.

Ask for the history before you rely on the current estimate

A buyer should request several years of past CAM reconciliations, not just the current estimate, to see whether the landlord has a pattern of significant true-ups or credits. A seller who has never seen a large reconciliation bill is not necessarily one who never will, since CAM costs move with the landlord’s own capital spending on the property.

Treat it as a due diligence item, not just a bookkeeping detail

Because CAM reconciliation liability can be sized like any other real, if delayed, expense, treat it the same way you would treat an undisclosed liability search during due diligence, and get it addressed explicitly in the closing adjustments rather than assumed away.