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 Iowa, a business that leases commercial space such as offices, warehouses, or retail locations is typically required to enter into a commercial lease agreement. This agreement outlines the terms and conditions of the lease, including the payment of rent. If a tenant fails to pay rent on time, the landlord may impose late fees, terminate the lease, or even lock the tenant out of the premises, depending on the provisions of the lease agreement. Iowa law allows for the enforcement of late fees as long as they are clearly stated in the lease and are reasonable. The concept of 'reasonableness' is important, as excessive late fees may be contested in court. Additionally, Iowa recognizes the implied duty of good faith and fair dealing in contracts, which requires both parties to act honestly and fairly in the performance and enforcement of the lease. A landlord's actions, such as charging late fees for a slight delay in rent payment, could potentially breach this duty if they are deemed to be in bad faith or unfair, particularly if the lease does not specify that time is of the essence for rent payments.