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 or continues to use the leased premises for a purpose other than as permitted by the lease agreement (after receiving notice of the improper use), the landlord may have the right to terminate the lease and lock the commercial tenant out of the space by changing the locks.
A commercial landlord’s ability to lock a commercial tenant out of the leased premises—sometimes referred to as one of the landlord’s self-help options or remedies because the landlord may be able to exercise these rights without going to court—depends on the specific language in the written lease agreement and the state's contract law.
For example, a state's contract law may determine if any breach of the lease agreement by the tenant was a material breach that might justify an extreme measure such as changing the locks.
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 changes the locks on the leased premises because the tenant is a few days late paying the rent may be in breach of the landlord’s implied duty of good faith and fair dealing.
In Michigan, a commercial lease agreement is a binding contract between a landlord and a tenant for the rental of nonresidential property. When a tenant breaches the lease, such as by failing to pay rent or using the property for an unpermitted purpose, the landlord may have the right to terminate the lease. Michigan law allows for self-help remedies, which can include changing the locks to lock out the tenant, but this is subject to the terms of the lease agreement and must be done in accordance with the law. The lease must explicitly grant the landlord the right to use self-help, and even then, the landlord must act in good faith and not precipitously. The implied duty of good faith and fair dealing in Michigan requires that the landlord's actions are reasonable and not excessive in response to the tenant's breach. If a landlord acts in a manner that is considered unreasonable or in bad faith, such as changing the locks for a minor or brief breach, they may be found in violation of this duty. It is advisable for landlords to proceed with caution and consider seeking a court order for eviction rather than using self-help measures to avoid potential legal complications.