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 Arizona, 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, including the payment of rent and the consequences of late payments, are governed by the specific language within the lease agreement itself. Arizona law allows landlords to charge late fees if this is stipulated in the lease; however, the fees must be reasonable and not punitive. The landlord's right to terminate the lease and lock out a tenant for nonpayment of rent is also subject to the terms of the lease and must be executed in accordance with Arizona's statutory law and case law, which may require certain notices and procedures to be followed. Additionally, under Arizona contract law, there is an implied covenant of good faith and fair dealing in every contract, which means that both parties are expected to act honestly and fairly in the performance and enforcement of the lease agreement. A landlord who acts in a manner that is excessively punitive or unreasonable, such as charging late fees for rent that is only an hour late without clear stipulation in the lease, may be found to be in breach of this implied duty.