What we check, and what it has been worth
71 checks run on every statement we read, across 10 families of error. Each one below is a check we run, what it has taken back, and how it is proven. Your lease decides which of them apply to your sites, and the scan tells you which.
We publish no industry error-rate statistic, because none of them is traceable to a source we can show you. Every figure below comes from a documented case. What applies to your portfolio is decided by your leases, not by us: the scan reads each audit clause and tells you, site by site, which checks run, which route the clause permits and which sites we cannot take.
Your right to object, and the clock
California Civil Code section 1950.9, added by SB 1103, took effect on 1 January 2025 for qualified commercial tenants: a microenterprise of five or fewer employees, a restaurant under ten, or a nonprofit under twenty that has attested in writing. Operating costs may not be passed through unless they are allocated proportionately and supported by documentation. The other half of this family is the clock, and it is unforgiving. Illustration: a retail tenant paid a $14,000 balance, let a 90-day objection window pass, and then found $8,200 of improper capital and duplicated fees with no route left to recover it.
9 checks in this family, 5 live today
The share of the pool you are billed
The denominator is the single most valuable number on the statement, because it multiplies every line above it. Illustration: a lease defined the pool as gross leasable area excluding an 85,000 square foot anchor, and the reconciliation divided by 300,000 square feet with the anchor left in, rather than 215,000. Every line inflated by roughly 40 percent, which on a $50,000 CAM bill is $20,000. Illustration: a 4,800 square foot tenant with a fixed 8.0 percent share was billed 10.2 percent because the landlord divided by 47,100 square feet of occupied space, a $4,070 overcharge on a $185,000 pool.
10 checks in this family, 4 live today
Capital dressed as maintenance
A replacement is not a repair, and the difference is the whole cost against one twentieth of it. Illustration: a $65,000 HVAC replacement expensed in the year instead of amortised over twenty costs a 12 percent tenant $7,410 in that year alone. Illustration: a medical-office statement carried $62,000 of building repairs whose ledger held a $24,500 line reading parking lot resurfacing phase 2. Illustration: one reconciliation carried $38,000 of parking maintenance, $12,500 of HVAC maintenance and upgrades and $9,200 of lobby improvements, capital in all three cases, totalling $59,700.
9 checks in this family, 4 live today
Management and administrative fees
A fee is a rate applied to a base, and both halves are in the lease. Illustration: a lease capped the management fee at 4 percent of base rents; on $1,200,000 of base rents that allows $48,000, and the landlord billed $67,500, an effective 5.625 percent and an overage of $19,500. Illustration: a 15 percent administrative fee on a $340,000 pool costs a 5 percent tenant $2,550 a year, and it is charged on top of a management fee that the lease may not permit it to stack on.
8 checks in this family, 6 live today
Caps, gross-up and escalations
A cap is worth what its base and its classification make it worth. Illustration: prior-year controllable costs of $148,000 under a 5 percent cap allow $155,400; the statement billed $158,940, an excess of $3,540 that recurs every year the base is wrong. Illustration: a base year stated at $18.50 per square foot against actual costs of $21.20 inflated a 3,500 square foot tenant by $9,450 a year and $66,150 across the term. Illustration: variable costs of $84,000 at 78 percent occupancy normalise to $102,308 at a 95 percent gross-up threshold, and a tenant in a half-let building carries that difference when the clause is not applied.
8 checks in this family, 7 live today
Costs that are not operating costs
Some costs are not operating costs whatever the pool is called. Illustration: a $6,400 line reading Provision for Doubtful Accounts is an accounting estimate of a tenant who did not pay, charged to the tenants who did. Illustration: a $14,200 corporate services allocation where the lease excluded overhead of the landlord principal office. Carbon penalties belong here too: many leases exclude fines and penalties in terms, and the reporting duty and the emissions limit sit on the owner, not on the tenant.
10 checks in this family, 8 live today
Property taxes and assessments
Taxes arrive as one number and are rarely one number. Illustration: a lease covering Unit 4 on Parcel A, against a statement allocating $8,200 of Parcel B taxes and a $3,100 street-improvement assessment, $11,300 challengeable before anyone argues about the rate. Illustration: a California property reassessed after a sale raised a 10 percent tenant tax share from about $2,272 to $28,125. For a Florida tenant this is currently the fastest money in the catalogue: the repeal is dated, the arithmetic is on the invoice, and the refund route is published.
7 checks in this family, 4 live today
Insurance
An insurance clause names its coverages, and the premium for anything it does not name is the landlord own protection. Illustration: a lease permitting commercial general liability and property cover only, against a statement showing property $8,200, earthquake $2,300 and directors and officers $1,400, with $3,700 outside the clause. Premiums have moved sharply enough in recent years that a rise is not evidence of anything on its own, which is why the spike test asks for the declarations page rather than asserting a number.
5 checks in this family, 4 live today
Utilities and shared services
A shared utility line is usually several things, and only some of them are shared. Illustration: a $22,000 building-services line whose backup showed $14,400 of genuine exterior power, $4,200 for two individually metered suites and $3,400 for the landlord management office, leaving $7,600 that the pool should never have carried. Illustration: $81,400 paid to an entity whose name matched the management company, standing for 34 percent of the controllable spend on that statement.
6 checks in this family, 2 live today
Arithmetic, and what the ledger supports
Before any line is argued about, the statement has to tie to something. Illustration: a $318,250 statement against $304,100 of ledger support with no adjustment schedule, a $14,150 gap that nobody had explained. Illustration: a $17,900 snow-removal invoice for December 2022 storm work included in the 2023 reconciliation, a year the tenant may not even have occupied. Illustration: a true-up where the correct balance was $5,283.76 and the landlord billed $8,500, an error of $3,216.24 in plain arithmetic.
8 checks in this family, 6 live today