sales Domain Leasing Risks

[targetpro]

Got an offer today to lease a very strong category defining domain in an industry that is known for aggressive email marketing. My worry is that the user can pay for a month or two and essentially "burn" the domain by spamming it and/or getting it delisted in Google. It is an exact match generic that will rank #1 for a major keyword with minimal SEO effort.

When leasing, what sort of protection does the seller have? The lessee can destroy a name by spamming it by mail and potentially lose the domain name to registrar TOS violations. A domain can be delisted in Google and nearly impossible to relist (takes alot of time and money best case to relist). Or the lessee can create some infringing content that could lead to a UDRP.

It seems like leasing domains is a bad idea, unless you are dealing with a massive company that has signed an extensive contract that protects the lessor. But this type of company can usually just buy the domain outright anyhow. Leasing would be unusual by any well funded company, so I don't understand why people take the chance to lease? Seems way too risky for me. Thoughts?

 

[Rob Monster]

Domain leasing is a very effective way to bait the hook so to speak, i.e. to get an end-user on board with a domain that they will eventually buy.

On the other hand, there are domain speculators that are basically uses leases as options. We know who they are, and they have a role to play too.

In short, there is a growing group of speculators who are getting leases, seller-financings, or purchase options and then immediately trying to flip the domain in order to arbitrage the exit value.

One important reason we do give you the full contact details of the inquiring party is so that you can establish whether they are a logical retail buyer or a speculator.

So, yes, leasing is still great, but you have to know who is your counter-party before you give them the exclusive license to shop around your domain!

 

[Sutruk]

Are they just interested in lease? I mean, did they ask for the price? or did they just asked you for a lease, without asking the price of the domain?
Because this can indicate a lot about their intention to use the domain.

 

[targetpro]

It is a six figure domain and they know this and are supposedly willing to pay that six figures but over a few years. Just seems way too risky to even consider. Unless i'm missing something about the leasing market? A registrar can suspend your domain just based on a single spam complaint and Google can delist for so many reasons. I don't understand why somebody would give up control of their domain without insurance? It would be like letting somebody rent your car without a specific policy that covers this. So much can go wrong. Maybe another @Rob Monster service? Lease Insurance?

 

[Samer]

i only Lease to OWN.

misconception, lease is only rent.

i disagree with assessment of “risk” especially if you use reliable provider like Epik Escrow!

i’m currently financing$100 name, with $20 month and zero percent interest, and anytime i dont pay, they just re-process domain (u allowed to use while “lease” btw) and can pay off the rest, whenever to own %

Epik is the best, and leasing should be utilized more.
To each his own, different solutions, different needs,
you probably operate on a larger scale than $100, but —no chance i was goin to drop $100 up front on this one

 

[targetpro]

i only Lease to OWN.

misconception, lease is only rent.

i disagree with assessment of “risk” especially if you use reliable provider like Epik Escrow!

i’m currently financing$100 name, with $20 month and zero percent interest, and anytime i dont pay, they just re-process domain (u allowed to use while “lease” btw)

Epik is the best, and leasing should be utilized mpre

It makes no difference who you use or whatever the intention is to own or rent. The moment somebody uses your domain in commerce, you can lose that domain for a multitude of reasons (usually abuse). And the lessee is not going to keep paying the lease if the domain is suspended or delisted from Google even. Your domain becomes a brick or close to it. Then what?

 

[Sutruk]

It makes no difference who you use or whatever the intention is to own or rent. The moment somebody uses your domain in commerce, you can lose that domain for a multitude of reasons (usually abuse). And the lessee is not going to keep paying the lease if the domain is suspended or delisted from Google even. Your domain becomes a brick or close to it. Then what?

You could make an insurance then, specified in the terms and conditions. If they make you lose the domain for bad practices (practices specified on the leasing contract) then they must pay you the total price of the domain.
I am just thinking about a solution

 

[targetpro]

Also, what if a company gets a bad reputation with your domain for scamming consumers or whatever? It can end up on RipOffReport and ComplaintsBoard and ConsumerAffairs or even the BBB if they use the .com as their company/brand name. You will never be able to kick this reputation for anybody searching even years later. So risky to put six figures of value in somebody's hand for a couple thousand dollars or whatever. Makes no sense to me?

 

[Sutruk]

Also, what if a company gets a bad reputation with your domain for scamming consumers or whatever? It can end up on RipOffReport and ComplaintsBoard and ConsumerAffairs or even the BBB if they use the .com as their company/brand name. You will never be able to kick this reputation for anybody searching even years later. So risky to put six figures of value in somebody's hand for a couple thousand dollars or whatever. Makes no sense to me?

Ask them to pay the half in advance, then lease the rest.

 

[targetpro]

You could make an insurance then, specified in the terms and conditions. If they make you lose the domain for bad practices (practices specified on the leasing contract) then they must pay you the total price of the domain.
I am just thinking about a solution

Sure but they would need to put the entire amount in Escrow and that means they have the money to buy the domain in the first place, so why lease? The only time I can see leasing working is with a extensive due diligence and a very established company that enters into binding contracts. But again, a company like that would likely just buy the domain outright as the legal fees and payments probably just a hassle, unless we are talking an 8 figure deal or something.

 

[JoeCanadian]

Why not structure it is a payment plan with say 1/3 at the beginning? Epik offers this as an option. The 1/3 down means they hurt themselves if they hurt the domain name from a Google viewpoint.

 

[Sutruk]

Sure but they would need to put the entire amount in Escrow and that means they have the money to buy the domain in the first place, so why lease? The only time I can see leasing working is with a extensive due diligence and a very established company that enters into binding contracts. But again, a company like that would likely just buy the domain outright as the legal fees and payments probably just a hassle, unless we are talking an 8 figure deal or something.

Tell them the domain is only for sale. Tell them to go to their bank and ask for a loan They will pay monthly, but to the bank.

 

[Samer]

Tell them the domain is only for sale. Tell them to go to their bank and ask for a loan They will pay monthly, but to the bank.

i dont understand all the doom-and-gloom scenarios.

you’re making monthly payments to an accredited registrar who takes over makes process seamless beginning to end. i trust Epik more than “insured” Escrow.com with my domain, for all my dn leasing needs

Never give away freedom of taking ownership one day.
never enter lease without option to buy, so maybe, i try, control, as many things can stem out control as possible.

Samer

 

[targetpro]

Why not structure it is a payment plan with say 1/3 at the beginning? Epik offers this as an option. The 1/3 down means they hurt themselves if they hurt the domain name from a Google viewpoint.

I don't see how anybody can consider less than the minimum they would sell the domain for outright as a downpayment. I'd only make the deal if whatever I get up front would ultimately satisfy me for the sale and the rest is just gravy.

 

[Sutruk]

i dont understand all the doom-and-gloom scenarios.

you’re making monthly payments to an accredited registrar who takes over makes process seamless beginning to end. i trust Epik more than “insured” Eacrow.com with my domain, for all leasing to buy needs

Samer

I am just trying to give some ideas...

 

[targetpro]

i dont understand all the doom-and-gloom scenarios.

you’re making monthly payments to an accredited registrar who takes over makes process seamless beginning to end. i trust Epik more than “insured” Eacrow.com with my domain, for all leasing to buy needs

Samer

That has nothing to do with it. The domain can be suspended, cancelled, delisted or simply defamed. All of which destroy the value of the domain. It is like if you lease a car and crash it. Obviously the bank won't lease you the car without full insurance coverage. With a domain lease you don't have that protection. Again, it makes no difference who the counterparty or registrar is. It is YOUR domain and YOU take the hit with no compensation (other than whatever payments you received up to that date).

 

[targetpro]

Tell them the domain is only for sale. Tell them to go to their bank and ask for a loan They will pay monthly, but to the bank.

That is what I did. I just don't understand why "leasing" is even a thing? Without insurance to cover loss or damage, one would be crazy to "lease" a domain.

 

[Samer]

I am just trying to give some ideas...

oh no for sure, and who wants to be on the other end!

i’m interested in knowing #’s and i may be ignorant!

You probably are on to something, Sounds like a lot of features epik can add for their “DNProtect.com” release.
Maybe Rob can chime in on all the doomsday scenarios.

Still trying to wrap my mind with that “Sinkhole” scenario!

Samer

 

[Sutruk]

That is what I did. I just don't understand why "leasing" is even a thing? Without insurance to cover loss or damage, one would be crazy to "lease" a domain.

I have just given my ideas, but I still haven't done any domain lease. And I understand that there's some domains more "risky" than others, in terms of possible uses.
Just do what you feel more confortable. If its a 6 figure domain, you must be very sure of who is the interested party, in order to lease the domain to them.

 

[Name Trader]

@targetpro - Thanks for this thread. I haven't done any leases, primarily because of the problems you have elaborated in this thread. To which I haven't seen any concrete solutions in here. Is there anywhere on NP where this has been discussed in length with some concrete solutions to these problems.