Passive acoustic monitoring (PAM) is an increasingly common method for studying populations of vocally active species. However, the detection of individuals not resident to a site may obfuscate inferences about occurrence and population change. Here, we provide a framework for distinguishing resident from non-resident individuals to estimate territory—rather than site—occupancy in PAM programs by leveraging datasets on vocal behavior and acoustic detections for spotted owls (Strix occidentalis) in the Sierra Nevada, California, USA. Based on acoustic/GPS tags, the extent over which individuals typically vocalized (the “vocal home range”) was small relative to space use, such that the likelihood of double counting resident territory-holders across multiple survey sites was low. However, comparing passive acoustic detections to known resident owl locations revealed that detections occurred at PAM survey sites known to be unoccupied, possibly because of the presence of non-territorial individuals. Strict thresholds that required acoustic detections over multiple survey periods successfully removed all detections of non-resident individuals but increased the probability of not detecting resident individuals. Conversely, relatively liberal thresholds that minimized the probability of missing resident individuals increased the probability of detecting non-residents. Thus, a tradeoff exists between error types, with optimal threshold criteria dependent on conservation objectives. Our study highlights the importance of examining patterns in individual vocal behavior and acoustic detections to minimize inferential errors in PAM. It also provides a generalizable framework that can be tailored according to specific conservation objectives to strengthen inferences from PAM as it becomes standard practice in conservation science.