LTO is Betting on the Buyer and the Platform

When you agree to a lease-to-own (LTO) domain name deal, you’re making two bets: one on the buyer’s ability and willingness to complete the payments, and another on the platform’s ability to stay operational for the entire lease term. It’s easy to focus on the buyer, but the platform should also be considered, and that decision shouldn’t be made based solely on the transaction cost.

There are some platforms that have operations governed by a governmental authority. I believe Escrow.com, for example, has specific escrow requirements in the different states it operates. I think it also has California-specific escrow requirements it must meet to operate because the business is located there. Law firms and attorneys also have specific governmental requirements and oversights for managing escrow payments and transactions.

Beyond standard business operational oversights, I don’t know if other platforms have legal requirements for holding domain names and administering payments. I don’t believe they can call themselves escrow services though, unless they are licensed in the jurisdictions in which they operate.

When you’re doing a deal where a platform or company collects payments and holds the domain name over a period of time, you should try to understand what safeguards the business has in place to protect your domain names and payments. If the company goes out of business, faces serious business-altering litigation, or is even acquired, there could be issues related to the administration of deals. You should understand what will happen if there is an issue with the provider.

I am not going to advise on how to select a platform or service for administering LTO deals, but people should understand they are not just betting the buyer will continue paying, they are also betting that the company facilitating the deal will still be in business throughout the entire deal term or has firm business continuity plans that will not impact their deal. Before entering a long-term LTO deal, it’s important to review the platform’s reputation, ownership structure, and history rather than the business that offers the lowest transaction fees.