Risks with selling website and get paid in separated terms

[Runfun]

I want to sell my website and it's a nice amount of money but the buyer doesn't want to buy it in one term but in 3 or 4 terms. In some way it could be a risk for me, what if they only pay the first part or what if I sell and the go bankrupt? They say you're still the owner of the domain but they have access to all data, content, mailaddresses, database of my newsletter and subscribers, etc. As far as I know they even could pay one part and redirect all visitors to another domain in a worst case scenario.

Does someone have advice how to sell a website, get paid in several terms and still have some control?

[phranque]

use an escrow service.

[Runfun]

I had to look up what it means but still they will have access to everything without paying the full amount of money. I proposed to share revenue for the amount they paid so the quicker they pay they quicker they are the owner.

[lammert]

Run as fast as you can.

This buyer wants to buy all your product, customer and business logic for 25% of the price. Once they have downloaded your database (matter of an hour), they come with a reason to not pay the rest of the money and you have nothing left beside a large headache.

[Runfun]

Lol, almost sounds like my nightmare.

They say you've still the domain but than I'll be left with only the domain. So summarised it's the best solution to get payed the full amount and there's not a solution that can work well if it's in several payments.

[lammert]

It will only work well in several payments if you can deliver the IP in multiple tranches. For that you would need a lawyer with knowledge of site transfers to create a bullet-proof contract.

[LifeinAsia]

the buyer doesn't want to buy it in one term but in 3 or 4 terms.

Not a problem- they buyer gets everything after the final payment. Nothing until then. If the buyer balks at that, run away.

[Runfun]

I got the response that they can't do anything as long as I've the ownership over the domain. Not true as far as I know because they have everything and even a backup isn't much worth if I don't have access to it. Difficult decision because the amount is nice and not affordable for most people so only companies left to sell.

[lammert]

There are two possibilities
1) They don't have the money. In that case is doing business with them a waste of time.
2) They don't want to pay. In that case is doing business with them a waste of time.

[Runfun]

There's a 3rd, maybe they can be trusted but worth a 6 figure price I'm not willing to take the risk :-(

[lammert]

One way to find out is to get a lawyer involved and let the lawyer send a letter that their law office will take over the final stage of the deal closing. Just a few lines of text. Nothing specific about the terms of the site transfer, price etc.. Such a letter shouldn't cost you a lot of money.

When the buyer doesn't have the money or doesn't want to pay, they will back off. If they were afraid of taking a risk, they now know you are serious about the transfer.

For a 6 figure transaction is getting legal advice beneficial anyway. Think of tax rules etc. If you are now trying to sell the site as a private person it may be beneficial to first incorporate and then make a business-to-business transaction. In many jurisdictions tax levels for businesses are lower than tax levels for private persons.

[LifeinAsia]

I got the response that they can't do anything as long as I've the ownership over the domain.

Then I'd go with the escrow option (if you're still interested in moving forward). They make the payments to the escrow company, which maintains ownership until all the payments have been completed. Until then, you continue to run the site.

In the contract, specify that they can back out before the final payment and get all their money back. That should alleviate any worries they may have that you tank the site and make it worthless before they get control over it.

It's basically the same as when selling a house (at least here in the U.S.)- during the escrow period, the escrow company collects the funds from both sides, hold title of the house, then transfers ownership to the buyer and pays off any mortgages held by the seller once everything's complete. Until then, the seller continues to use the house.

So if the buyer is not willing to agree to that, then that's a huge red flag. I would certainly walk away at that point.