Lease to Own deals have become much more normal in the domain space. LTO deals give buyers the opportunity to use a domain name at a lower upfront cost, and it gives domain name sellers a source of consistent monthly income. There is some risk with LTO deals for a domain investor. I was asked about this today on X.
If a lessee engages in deceptive or illegal practices with the domain name – anything from phishing schemes, email spam, selling counterfeit or illegal products/services, or hosts other illegal activities on the domain name, there can be problems for the domain name and domain name registrant.
The legal aspect of these activities is a major risk. While the domain owner would not be directly responsible for the lessee’s actions, they might still have to deal with the legal fallout. Hiring an attorney to mitigate the damage can be necessary and costly. If the LTO deal is done through a third party platform, the domain registrant may not know who was even leasing the domain name to direct any legal action. In addition, the TOS likely protects the platform from litigation more than the domain investor.
In addition to the legal risk, the domain name could be blacklisted by search engines and email providers. This can hurt the value of the domain name in the long term since these types of blacklists can live on long after the lease is canceled.
To mitigate some of this risk, domain name owners should utilize strong agreements when leasing domain names directly with a counterparty. All of the top domain name attorneys can draft customized agreements to protect the domain registrant (and domain name) as much as possible. In addition, domain registrants should keep an eye on their LTO domain names to try to ensure they aren’t being misused. If something is amiss, I would contact an attorney for counsel to see what can be done. Finally, domain investors should be selective with the domain names they offer LTO deals on and the pricing levels.
Lease to own deals are a great way to generate revenue and allow a business to develop on it while paying for the domain name. There is some risk that is inherent with LTO deals and investors should consider the risk before offering LTO deals for their domain names.
I’ve done several, but all were major 7 figure deals with significant down payments. Happy to say that they have all worked out. I won’t do a LTO where the Buyer simply makes payments without the commitment of a significant down payment. For all the reasons you stated above Elliot. I would do it for a trusted associate, but none of my 1200+++ names at Afternic offers LTO.
I try to mitigate some of the risk by keeping the LTO months fairly low or offering primarily on lower valued/priced names.
These are great points you’re bringing up, Elliot.
But I would take it a step further by pointing out that (aside from misuse, fraud, etc.) the mere use of the name in commerce would automatically decrease the future value of the brand if the use-case fails.
What buyer wants to acquire a name that’s associated with a (prior) failed business or site, absent a huge price discount.
So there are plenty of risk with these structured deals, imo.
LTO, wich is common Atom and Afternic is $100 to $200 per month. My question is do they Eat Bread and Water 29 days and 2 days food with vitamins