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 California, 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 the consequences of failing to do so on time. If a tenant does not pay rent as agreed, the landlord may impose late fees, provided these fees are specified in the lease agreement and are reasonable in relation to the actual harm caused by the late payment. California law requires that the enforcement of late fees and other lease provisions be conducted in good faith and with fair dealing. If a landlord attempts to charge excessive late fees or lock out a tenant without proper notice and procedure, it may be considered a breach of this duty. The specific remedies available to a landlord, such as terminating the lease or locking out the tenant, are governed by the terms of the lease and relevant California statutes, including the California Civil Code. It is important for both landlords and tenants to understand their rights and obligations under the lease and state law to avoid disputes and potential legal action.