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 New Jersey, a commercial lease agreement is a binding contract between a landlord and a business tenant for the rental of nonresidential property, such as office spaces, warehouses, or retail locations. The terms of the lease dictate the obligations and rights of both parties, including the payment of rent and the consequences of late payments. New Jersey law allows landlords to charge late fees if this is stipulated in the lease agreement; however, the fees must be considered reasonable and not punitive. If a tenant fails to pay rent on time, the landlord may take actions such as imposing late fees, terminating the lease, or locking the tenant out, but these actions must comply with the terms of the lease and applicable laws. The implied duty of good faith and fair dealing is recognized in New Jersey, which means that both parties are expected to act in a manner that respects the spirit of the agreement and does not undermine the other party's rights or benefits under the lease. A landlord's response to late payment should be proportionate and in line with the lease provisions to avoid breaching this duty.