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.
I would only recommend leasing with these 3 major criterias:
option to buy with a price already set
name ownership temporarily held by the leasing company to prevent any problems with original owner breaching the contract (leasing company must have solid credentials)
Another variable to consider with your 10 year lease agreement.
What if you want to sell your business…. but your business highly depends on the domain name you don’t own.
There are a lot of IFs that the domain owner has to answer/guarantee before a deal can be made. This is why I think that leasing domains is not as big as buying and selling them.
I think that I leasee has better chances with a company that owns/maintains the domain that with an individual.