There are many great reasons for a person to consider leasing a domain name. Although the cost of leasing a domain name rather than buying it can be much larger over the long run, it’s a great opportunity for a fledgling business to get started with lower upfront costs. The company is able to prove their model, and they would hopefully be able to buy the domain name after a set period of time. Also, some domain owners are reticent to sell a prized domain name, so leasing it is a win/win for domain owner and leasee.
While there are plenty of reasons to lease a domain name, there are some things the leasee should consider prior to signing a lease agreement. For the sake of playing devil’s advocate, let’s say you sign a 10 year lease @ $500 month for a great domain name. You are leasing the domain name from a company owned by a person (or just a person) who registered the name 10 year ago. You build a great interactive website on the domain name, and traffic is growing, revenue is flowing, and all is good.
Four years into your lease, the company owner dies/declares bankruptcy/gets divorced/loses the name in a lawsuit/can’t repay a loan he took on the name…etc. What happens to your website built on this great domain name if something like this happens and the name is no longer owned/controlled by him and/or all living financial agreements are made null by a court?
At the moment, there are many apartment renters who are faced with eviction when their landlord was forced to foreclose. As for a domain lease, what contingencies are in place in the event of this to 1) prevent losing your ability to lease the name 2) prevent having to pay $xx,xxx in a lawsuit to stay a court order? It is critical to think about all of this before signing a domain lease and building a website on that domain name.