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 South Dakota, 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 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, provided these remedies are specified in the lease agreement. South Dakota contract law, like that of many states, includes an implied duty of good faith and fair dealing in contractual relationships. This means that a landlord's actions, such as charging late fees for rent that is only an hour overdue, could potentially be challenged if they are deemed to violate this duty. However, if the lease explicitly states a specific time by which rent is due and emphasizes that timing is critical ('time is of the essence'), the landlord may be justified in taking such actions. It is important for both landlords and tenants to understand the terms of their lease agreement and the applicable state laws governing commercial leases.