Do I Need to Audit My Landlord?

Have you recently received a bill from your landlord to pay for more maintenance expenses than estimated? Reconciliation statements are common at the end of the year when landlords are calculating their tenants’ portion of a property’s operating expenses.

As a current or future tenant, a triple net lease covers base rent and operating expenses: taxes, insurance, and common area maintenance (CAM). CAM covers expenses for shared spaces, such as lighting the parking lot, landscaping, and security.

Tip for future tenants: When you’re negotiating a letter of intent (LOI), request a cap on variable CAM fees and other controllable operating expenses. Negotiate a limit to the amount the CAM fees can increase year over year. Want help negotiating a lease? Contact our healthcare real estate experts.

When you receive a reconciliation statement, this is your opportunity to evaluate the whether the expenses are correct or justified.

  • Was a clerical error made when recording an expense?

  • Is there an opportunity to reduce expenses by bidding or changing providers? Competitively bidding a service, such as security, can often be cost-effective and may result in better customer service.

  • Has the landlord exceeded the CAM cap outlined in your lease?

Before paying your bill without questioning its accuracy, take a deeper dive in to the line items and ask for a second opinion. Our medical brokers are willing to help!

Listen to the Texas Dental Practice Podcast Episode 034: Do You Need to Audit Your Landlord?