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 York, a business that leases commercial space such as offices, warehouses, or retail stores will typically enter into a commercial lease agreement. This contract 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, depending on the provisions of the lease agreement. New York law allows landlords to charge late fees if they are reasonable and stipulated in the lease. However, landlords must also adhere to the implied covenant of good faith and fair dealing, which is inherent in all contracts under New York law. This means that a landlord's actions, including the imposition of late fees, should not be arbitrary or vindictive, and should comply with the spirit of the agreement. For instance, charging a late fee for rent that is only an hour late may be seen as a breach of this duty unless the lease specifically states that rent is due at a particular time and emphasizes that timing is critical.