As the year draws to a close, occupier real estate teams face a time-sensitive rush of lease cost updates. Landlords typically send out updated operating expense estimates for the coming year in late Q4, and then follow up with annual reconciliation statements for the past year in Q1. In other words, right now is crunch time – a wave of Common Area Maintenance (CAM) charges, property tax bills, insurance fees, and utility true-ups is about to hit. Each of these statements demands careful review under tight deadlines, yet many companies feel unprepared to handle the sudden spike in volume. Without a robust program in place, it’s easy for an overworked team to simply process these invoices at face value, potentially rubber-stamping overcharges.
This period is critical because most leases limit the window for review or audit of reconciliation statements. Many commercial leases give tenants only 30–90 days after year-end to examine and contest errors. Miss that window, and any mistakes become money left on the table – you may be barred from recovering overpayments later. With new 2026 budget estimates arriving and 2025 reconciliations imminent, tenants must act with urgency. Ensuring you have a robust review process or partner in place before these statements arrive is the only way to confidently verify charges and avoid paying more than you owe.
Hidden Overcharges: How Much Are Tenants Overpaying?
If your team isn’t rigorously reviewing every operating expense (OpEx) statement and CAM reconciliation, there’s a high likelihood you’re overpaying your landlords. In fact, industry data indicates the overwhelming majority of tenants end up overpaying at some point during a lease. Even seemingly small errors add up: for example, a billing mistake of just $200 per month would cost a tenant over $12,000 extra over a five-year lease. These overpayments often go undetected if no one is scrutinizing the landlord’s math against the lease terms.
How common are discrepancies? Studies show they’re alarmingly widespread. One analysis found that nearly 28% of tenants discovered errors in their annual CAM reconciliation statements. Another review revealed a stunning 40% of CAM statements contained material mistakes in the numbers. These mistakes take many forms – math errors, inappropriate gross-ups, misclassified expenses, or outright incorrect charges – but all result in tenants paying more than they should. Crucially, only a small fraction of those tenants pursued formal audits, meaning most overcharges were never refunded.
Common Audit Findings (and Potential Overpayments):
- Misallocated Expenses: Costs not allocated per lease terms can inflate a tenant’s CAM bill by up to 18% (e.g. a landlord charging you for vacant space or other tenants’ shares).
- Duplicate Billings: About 1 in 5 tenants has encountered double-billed expenses in CAM statements, often paying twice for the same service until caught.
- Incorrect Area Calculations: Errors in square footage calculations lead to 5–10% discrepancies in CAM charges, per BOMA – meaning you could be paying for more space than you actually occupy.
- Caps and Escalations Mistakes: If a lease caps expense increases (e.g. 5% a year) but the landlord’s reconciliation ignores it, that excess charge is improper. Without caps, CAM increases can easily outpace inflation (>5%/year), so tenants must verify caps are honored.
Given these patterns, it’s no surprise that tenants who proactively audit often recover significant sums. One major tenant reported that exercising their lease audit rights with professional help led to an “excellent settlement” and substantial cost savings on a single large lease. In general, third-party lease auditors frequently find 3–5% in annual overcharges that would have otherwise gone unnoticed. In short, failing to diligently review each estimate and true-up is likely costing your company real dollars – potentially hundreds of thousands across a portfolio – and those losses compound every year the errors persist.
Inflation and Rising Costs Compound the Problem
This year’s OpEx season is especially perilous because it follows two years of high inflation and surging property expenses. From 2021 through 2023, the U.S. experienced multi-decade high inflation, with consumer prices jumping about 7% in 2021 and 6.5% in 2022 – the steepest rise in 40 years. For tenants, that inflation directly translates into higher “additional rent” charges on everything from cleaning services to electricity to building insurance. Many commercial leases (particularly triple-net leases) allow landlords to pass 100% of operating cost increases onto the tenant, shifting all the inflation risk to you, the occupier. If you’re not closely monitoring these charges, you could be absorbing steep increases without realizing mistakes or opportunities to contest unreasonable costs.
Just how much have costs climbed? Recent data on U.S. commercial properties shows eye-popping increases in key expense categories due to inflation and market pressures:
- Property Taxes: Several major markets saw double-digit spikes in property tax bills last year. For example, New Orleans led with a 14.7% year-over-year increase in taxes, with other cities close behind at ~14% hikes. Such reassessments and millage increases can dramatically raise your share of taxes – and if your lease language on tax escalations isn’t clear, you might overpay beyond what you agreed.
- Insurance Premiums: Property insurance costs have skyrocketed, especially in regions hit by natural disasters or higher risk. One report noted a 37% surge in insurance costs for properties in the New Orleans area and a 30.6% jump in South Florida in a single year. If your landlord’s insurance bill went up, that increase flows through to you. Without a careful review, you might pay for coverage that isn’t even applicable to your space or duplicate policies.
- Utilities, Repairs & Maintenance: Operating the building has gotten pricier across the board. Nationwide, repair and maintenance expenses jumped ~12.3% on average from 2021 to 2022 for offices, and some markets saw extraordinary spikes (nearly 39% in Baltimore, for example). Similarly, energy costs and janitorial services have been volatile. This means this year’s reconciliation statements may contain significantly higher actuals than last year’s estimates – a recipe for large “true-up” bills if you weren’t anticipating the increase.
Bottom line: inflation has created more room for error and abuse in OPEX billing. When costs were stable, an error might cost a few bucks; now, with expenses up 10–30%, any error or padding in the landlord’s favor costs proportionally more. It’s a challenging time for tenants because you not only face legitimate increases straining your budget, but also must be on guard for excessive or incorrect charges hidden in those bigger numbers. Especially if your own budgets didn’t forecast such large jumps, a surprise reconciliation shortfall can hit your P&L hard. This makes it mission-critical to review every line item – ensuring that inflation adjustments are fair and per lease terms, and catching mistakes that piggyback on the general rise in costs.
Be Prepared: Implement a Robust Review Program
To protect your company’s bottom line during this high-volume, high-stakes season, you need a structured program to handle the influx of lease expense statements. Relying on ad-hoc, last-minute checks won’t cut it. Here are some best practices to ensure every statement is reviewed diligently without overwhelming your team:
- Centralize and Organize Lease Data: Start by gathering all relevant lease documents, amendments, and last year’s reconciliation for reference. Key details – like your pro rata share %, expense cap clauses, excluded cost definitions, and audit rights timeframes – should be at your team’s fingertips. Having a central repository or lease administration system is invaluable so that nothing is overlooked when the statements arrive.
- Triage with Desktop Audits: Perform a quick “desktop audit” of each reconciliation as soon as it comes in. This means comparing the landlord’s billed amounts by category to last year’s figures and to the lease terms. A desktop audit can be done without formally notifying the landlord. Look for any category that spiked dramatically (say, 10%+ increase) and verify if that aligns with known changes (e.g. higher taxes or added services) – if not, flag it. Also cross-check fundamental items: Is the math correct? Is your share % applied correctly? Are management fees capped per the lease? This high-level screening will catch obvious errors or anomalies early. If everything looks reasonable and within expectations, you might accept the statement. But if discrepancies or questions arise, escalate to a deeper review. Often, significant or unexplained jumps in one line item warrant asking the landlord for backup details.
- Know When to Invoke a Full Audit: If a desktop review uncovers red flags or if the amounts involved are large, consider conducting a full lease audit. A full audit exercises your contractual right to examine the landlord’s books and records in detail. This typically involves requesting supporting documents (general ledgers, vendor invoices, tax bills, insurance policies, etc.) and possibly on-site visits to inspect records. Full audits are more time-consuming and may require specialist expertise, but they are the only way to verify questionable charges definitively (for instance, confirming whether that $100k HVAC repair was capitalized or properly excluded per your lease). If your lease lacks an explicit audit clause, note that tenants generally have an implied right to verify charges – and in fact, no audit clause may give you even broader rights to audit multiple years if needed. The key is to initiate the audit within the allowed timeframe and follow any notice requirements in the lease.
- Leverage Experienced Help if Needed: Many companies simply don’t have the bandwidth or in-house expertise to scrutinize dozens or hundreds of leases simultaneously. If that’s the case, don’t hesitate to bring in external experts who specialize in lease audits and CAM reconciliation. A dedicated lease auditing service can act as an extension of your team during this crunch, ensuring every statement gets a thorough review. The cost of an audit is often trivial compared to the potential savings – especially when errors averaging 3–5% of expenses are common. As one tenant remarked after outsourcing the audit process, the partnership “led to substantial cost savings” that might have otherwise been missed.
Remember, this flurry of year-end estimate updates and Q1 reconciliations is predictable and recurring. By establishing a disciplined program – whether internally or via a trusted partner – you can turn it from a dreaded season of surprise bills into a routine financial control process. The goal is to catch errors upfront, recover overcharges quickly, and confidently pay only what you truly owe per your leases. Given how many landlords’ statements contain mistakes, a robust review is not just prudent – it’s arguably a fiduciary responsibility to your company’s stakeholders.
The Scribcor Solution: White-Glove Audit Support for Peace of Mind
For organizations seeking expert help, Scribcor Global offers a comprehensive, white-glove lease audit service that is tailor-made for exactly this time of year. Scribcor is a U.S.-based lease administration firm that works exclusively for tenants/occupiers, and it prides itself on providing high-touch, customized support rather than one-size-fits-all solutions. When it comes to operating expense audits, Scribcor’s approach is designed to give you peace of mind that every charge is checked against your lease and any errors will be caught – all without straining your internal staff.
What sets Scribcor apart?
- Experienced, Onshore Team: Scribcor’s audit team is composed of seasoned professionals – attorneys, accountants, paralegals, and property management experts with deep knowledge of lease intricacies. Unlike some providers who offshore the work, Scribcor assigns a dedicated U.S.-based team to your account, with regional expertise on local tax and utility norms. You get direct access to people who know your portfolio inside and out, and quick responses whenever questions arise. There are “no ‘black boxes’ or waiting for someone overseas to get back to you next week,” as Scribcor emphasizes. This means faster issue resolution and a partner who can literally work in real-time with you through the year-end crunch.
- Desktop & Full Audit Services: Scribcor offers both desktop audits (high-level reviews of your landlord’s reconciliation statements and expense trends) and full lease audits (a granular examination of the landlord’s records when warranted). The team will comb through lease clauses and billing statements to identify any errors, omissions or overcharges. In a desktop audit, they verify calculations, check for compliance with your lease (ensuring no excluded expenses are snuck in), and flag unusual variances. If deeper investigation is needed, Scribcor can seamlessly transition to a full audit – invoking your audit rights, gathering supporting documents, and going line-by-line through the charges. At the end of the process, you receive a clear, confidential report quantifying any refunds or credits due, along with the evidence and lease citations to back up each finding. Scribcor will even handle communications with the landlord to pursue those recoveries on your behalf, making the process as hassle-free as possible.
- 100% Recovery Pass-Back: Critically, Scribcor’s model ensures that 100% of any cost savings or recoveries discovered during our “Desktop Audit” belong to you, the client. Every dollar of billing error they uncover and get corrected is returned entirely to your bottom line, unlike some auditors who take a hefty contingency fee. Scribcor’s incentive is simply to maximize your savings and prevent future overpayments, not to claim a share of them. This “client-first” philosophy means you can trust that their auditors are working in your best interest at all times. The payoff can be significant – as noted, clients have seen excellent financial outcomes from Scribcor audits, including substantial refunds for past overcharges and long-term savings from corrected billing practices. And because Scribcor’s fees are independent of recoveries, you get full transparency and value.
- White-Glove, Worry-Free Service: Scribcor’s white-glove approach isn’t just a slogan – it translates into proactive, concierge-level support throughout the engagement. Their team will adapt to your workflows and systems (they can work with any lease management software you use, or help you improve your data setup). They set up standardized templates and procedures to efficiently handle your portfolio’s reconciliations, even if you have hundreds of locations. During the busy season, Scribcor acts as an extension of your department – tracking incoming landlord statements, scheduling reviews, and keeping you informed of progress. Clients frequently remark that Scribcor’s high-touch communication and diligence turn lease admin from a headache into a source of confidence. Essentially, Scribcor finds and fixes the landlord’s mistakes, so you can focus on your core business. By engaging a partner that is laser-focused on tenant cost recovery, you gain assurance that you’re not overpaying a penny more than necessary on operating expenses.
At the end of the day, the goal is for your company to emerge from the year-end reconciliation cycle with zero surprises – no budget-busting invoices, no unnoticed overcharges lurking in your rent payments. Scribcor delivers that peace of mind by combining expertise, thoroughness, and tenant-centric service. With decades of experience (the firm’s first client from 1992 is still a client today, a testament to their service quality), Scribcor has seen it all: they know the tricks and errors landlords commonly make and how to spot them. Their auditors will catch the 5% “miscellaneous admin fee” that shouldn’t have been charged, the property tax that was supposed to be capped, or the utility bill that belongs to the neighbor – and they’ll get it corrected for you. In one recent takeover of a 220-site portfolio, Scribcor quickly uncovered numerous mistakes by the previous administrator (late fees, overpayments, even unapplied security deposit credits) and promptly corrected them – saving the client thousands of dollars right off the bat.
Conclusion: Don’t Leave Money on the Table
The coming weeks are pivotal for any company with leased real estate in the U.S. Landlords are rolling out 2024/2025 expense estimates and 2023/2024 reconciliations (depending on the exact timeframe), and with inflation driving costs up, the stakes have never been higher. Now is the time to ensure you have a plan to handle the deluge of statements. If you ignore the fine print or lack the resources to scrutinize each one, you risk overpaying tens or hundreds of thousands of dollars – effectively giving away value that could be retained or invested back into your business. In today’s economic climate, no organization can afford that kind of leakage.
The solution is straightforward: review diligently, and get help where needed. Whether building an internal review task force or partnering with experts like Scribcor, take action before the year-end bills come due. With a proactive audit program, you can confidently challenge any discrepancies, stay on top of landlord errors, and verify that every operating expense charge aligns with your lease agreements. Companies that do this not only save money through recovered overpayments, but also gain a stronger negotiating position with landlords (who are likelier to be accurate in the future when they know you’re paying attention). Plus, you’ll be able to budget more accurately for next year, with no unpleasant surprises.
In summary, treat this year-end as an opportunity: tighten your controls, engage the right expertise, and turn the chaotic season of CAM reconciliations into a win for your organization. The urgency is real – those new estimates and reconciliation statements will be in your inbox any day now. By acting now and reviewing every statement diligently, you can ensure your company only pays its fair share of operating expenses, and not a dollar more. That kind of vigilance and partnership (with a white-glove firm like Scribcor backing you up) will deliver measurable savings, protect you in an inflationary environment, and give you total peace of mind as you enter the new year. Don’t wait – prepare today to audit and save tomorrow. Your bottom line will thank you.