Domain Name Leasing

I'm not a fan of leases. Are you? Any success stories?

[Webwork]

I recently received an "offer" for a prime domain which offer, conveyed by a broker, eventually proved to NOT be a cash offer but an offer to pay over time. I'd call this a lease or lease-purchase offer. I'd call this owner financing. I'd call this several other names. I did not call it a deal AND was slightly miffed by a broker conveying the offer of a certain sum of many only to have the actual offer disclosed afterwards.

In my book IF a person or company is "credit worthy" - someone I should trust to pay their bills - then I expect that person or entity to be able to either raise capital or secure financing elsewhere. I prefer not to be in the financing business.

Leasing carries risks. Non-performance is one. Bankruptcy is another. Litigation another, as in "No, I didn't default!" or "I cured the default" and several other versions.

What does one do during a period of default? Are nameservers re-pointed during times when payment is overdue? It's possible to spell out contingencies in contracts. Can you anticipate all contingencies? Probably most if you've been around for awhile.

Another issue is the ability of an aggrieved domain lessee to do damage to a domain (website) during their "leasehold / tenancy". Imagine a homeowner who is having difficulty coming to grips with their mortgage being foreclosed (after making payments for several years) who expresses their displeasure by damaging the property or letting it fall into disrepair. Could an aggrieved domain lessee provoke a search engine penalty? What is the lessor kept the domain in their name during the lease? How easy will it be for the domain owner (the lessor) to disclaim credit for what was done . . when they "own the address"?

Here's a recent little article about the "pitfalls of domain leasing", based upon a presentation as "Names Con", currently running in Las Vegas: [namescon.com ]

Here's a little bit of bankruptcy law complexity about executory (contracts in the process of being fulfilled) and leases to consider: [bernsteinlaw.com ] In my 30+ years of practicing law I've seen situations where companies or individuals ran to bankruptcy to buy time, failed to put together a suitable plan, get kicked out of bankruptcy . . and after a short period of time . . file again, supposedly in good faith. All during that time the person or entity "milked" the assets of the "bankruptcy estate" for all they could . . and then, finally, "went bankrupt" as in didn't pay anyone. One of my favorite scenarios was where the "debtor in possession" (of a leased property) continued to collect rents . . and not pay anyone.

Food for thought.

If you have ever leased or lease-purchased a domain I'd like to read about your experience.

[edited by: Webwork at 4:54 pm (utc) on Jan 31, 2017]

[keyplyr]

In reality, aren't we all "leasing?" We really don't own these domains IMO. Just try not paying your rent on the TLD and it's back on the market.

[Dimitri]

Personally, I would never deal with a domain name broker, or anyone else, beside a registrar. Buy (rent) a domain name directly yourself at a registrar, or transfer the "ownership" to you. Any intermediate would be too risky, in my opinion. If you don't have the full and exclusive control of a domain name, the real "owner" can do whatever he wants. Like, from one day to another change the dns to point elsewhere, and "cash" your trafic and ranking.

[lucy24]

You could tell the potential buyer that they're welcome to put their content on the domain--this seems a much more practical interpretation of the word “lease”--but you're sure as ### going to keep ownership of the name (meaning the right to renew the registration annually) until they've coughed up the full $18,000*. And then watch how fast they run.

Edit: Also bear in mind that any self-respecting rent-to-own arrangement involves the buyer spending at least four times as much money as if they'd bought the thing outright in the first place. So you'd need to quadruple your asking price.


* Picking a number out of thin air.

[Webwork]

In reality, aren't we all "leasing?"

Not an opinion shared by various legal and tax experts.

While I understand the reference, I'm sure you understand that leasing an already registered domain - ~subletting, using your word - adds layers of complexity to the underlying domain registration agreement. Of course, fail to renew and I'm certain the lessee will add even more complexity, such as lawsuits for breach of contract or lease agreement.

Like, from one day to another change the dns to point elsewhere, and "cash" your trafic and ranking.

A lease can provide for a third-party to control the domain - such as an escrow agent / agency - pending final payment, so this isn't necessarily an issue.

Generally, I have no problem dealing with domain brokers. The real problem is domain brokers come in a levels of general business and subject matter (domain brokering) experience, professionalism, ethics, etc.

Also bear in mind that any self-respecting rent-to-own arrangement involves the buyer spending at least four times as much money as if they'd bought the thing outright in the first place. So you'd need to quadruple your asking price.

The "time value of money" thing and/or "opportunity cost" comes into play when a deal isn't a cash deal, so the "lease purchase price" is likely to be higher than the cash price. 4x value? Is that an industry standard screw job for the poor and the daft when it comes to renting-to-own big screen TVs?

[lucy24]

Is that an industry standard screw job for the poor and the daft when it comes to renting-to-own big screen TVs?

The applicability of the concept to domain names is, admittedly, limited ;) Unlike computers and furniture, domain names don't depreciate over time.

There's no such thing as a legally recognized lien holder (as with motor vehicle registrations) on domain names, is there?

[Webwork]

Lucy, I don't know of any lien registration system for domains, but I'm not an expert on the UCC (Uniform Commercial Code) which might offer some method. Certainly I've not see a domain registry that offers a method for liening domains. Using a third-party "domain escrow" may, in effect, work to the same effect as "title to the domain" would equitably belong to the lease-purchaser during the term of the lease. Upon payment in full then something akin to "legal title" would pass.

Interesting question. Answers being pulled out of thin air. :p ;)

[smilie]

webwork, if you aren't 100% sure in them, don't do it.

In the recent past I've had to 301- several websites with good domains to completely new ones. Reason: a hacker cracking hosting company's Wordpress installation (not mine) and loading all websites on that hosting box with hundreds of thousands of spam pages, and then pointing hundred thousand junk links to it. The new wave of spam is also automated and takes very little effort on their end to do. And then your domain is nowhere ever seen in G. And as far as I can tell in last 2 years absolutely nothing has changed, so there's no recovery.

That's how easy it is.

If your domain is valuable, you can get a shady pharma people auto-loading it with a bunch of shady content, auto-point thousands of spam links to it and make money for 2-4 weeks until Google knocks them off. They won't pay you anything, or maybe first month installment if it is small.

If I'd lease, I'd want to completely control what's on it, which means DNS, hosting and ftp.

[ambt]

I would never ever consider "domain leasing". I need to have full control over my websites, including the address. I hate bad surprises if something goes wrong. It costs a lot of work and time to develop a good site. It would suck to lose it.

[JAB Creations]

Domains can be had for less than $20 a year. If you're going to lease a domain name you might as well take a lease on the use of a pen.

John

[smilie]

JAB,

Without going into details, let's imagine you own Poker.com .
That domain brings easily $10 million per year in revenue. Leasing it would be very , very lucrative.

[lucy24]

Leasing it would be very, very lucrative.

Would a lot of people be willing to pay big money for the use of something that could be yanked away from them at any time? Yes, I realize there are all those churn-and-burn sites that clutter the bottom of the SERP when I search for exact text on public-domain works* ... but isn't the whole point there that the domain name itself costs next to nothing, so everything you do is pure profit?


* This is really true. I am at an utter loss to understand the persistent connection between auto insurance and Mrs. Beeton's Book of Household Management.

[accurate]

I doubt you'll find many people that have leased a domain name. It would have to be a category killer or dictionary word.

Epik offers leasing services and is a domain registrar.

[epik.com...]

Another option

[domainanimal.com...]