A business that leases real estate and improvements (buildings, etc.) in the form of space for offices, a warehouse, a restaurant, a nail or hair salon, a clothing store, a coffee shop, or other commercial (nonresidential) space will usually be required to sign a written contract known as a commercial lease agreement.

If the tenant (the business occupying the space) who signs a commercial lease agreement fails to pay the rent on time, the landlord may have the right to charge late fees, terminate the lease, and lock the commercial tenant out of the space by changing the locks.

A commercial landlord’s ability to charge late fees generally depends on the specific language in the written lease agreement and the state's contract law.

Contract law in most states recognizes an implied duty of good faith and fair dealing between parties to a contract, and a commercial landlord who charges late fees because the tenant is an hour late paying the rent may be in breach of the landlord’s implied duty of good faith and fair dealing—unless, for example, the lease agreement specifies an hour (12:00 p.m.) of the day by which rent is due and states that time is of the essence.

In Alabama, a commercial lease agreement is a binding contract between a landlord and a tenant for the rental of nonresidential property, such as office spaces, warehouses, or retail locations. The terms of the lease typically outline the obligations of each party, including the payment of rent and any late fees. If a tenant fails to pay rent on time, the landlord may impose late fees as specified in the lease agreement. Alabama law allows landlords to charge late fees, but these fees must be considered reasonable and are subject to the terms agreed upon in the lease. Additionally, the landlord may have the right to terminate the lease and lock out the tenant for nonpayment of rent, but this action must be in accordance with the lease provisions and applicable state laws. The concept of an implied duty of good faith and fair dealing is recognized in Alabama, which means that both parties are expected to act in a manner that is fair and does not destroy the right of the other party to receive the benefits of the contract. A landlord charging excessive late fees or acting in bad faith may be found in breach of this duty. It is important for both landlords and tenants to understand their rights and obligations under the lease and Alabama law. An attorney can provide specific guidance on these matters.