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 Texas, 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 of the lease agreement. Texas law allows landlords to charge late fees if this is stipulated in the lease; however, the fees must be reasonable and related to the actual or anticipated harm caused by the late payment. If a tenant fails to pay rent on time, the landlord may have the right to take actions such as charging late fees, terminating the lease, or locking the tenant out, but these actions must be in accordance with the lease terms and Texas law. The Texas Property Code also requires commercial landlords to provide a notice before locking out a tenant. Additionally, while Texas contract law does recognize an implied duty of good faith and fair dealing, this duty would not typically prevent a landlord from enforcing the clear terms of a lease agreement, including a specified time by which rent is due, provided that the enforcement is not unconscionable or excessively punitive.
