Leasing a high value domain name, your opinions/suggestions are needed!

[owntag]

Hi, guys

A company reached me and shows interests in a domain name that I have. I haven't listed it for sale but I replied I might be willing to part with it and told them the expected price range. However, they couldn't afford to pay my asking price and they asked if I want to lease the domain name for 3 years. I said I have no experience and knowledge on leasing domain name and would like to know their terms for consideration.

Here are their terms:

1. Leasing the domain to them for full 3 years.
2. They pay $5k/year and will start the leasing in earlier 2009. They pay $2.5k at beginning, and pay $5k at the end of the year which inc the 1st $2.5k of 2nd year.
3. They want to change the domain's administrative contact info to their company's while keeping the registrant contact info of mine.
4. Transfering the domain to a new account at the current registrar and both party has access/full control to the domain name.
5. They have the priority of buying of the domain after 3 years.

I want to make sure if this is a fair leasing deal and if I am aware all the potential problems that might arise later on. The following info/questions are listed FYI.

1. It's a high value .com domain, and its resell value is around $80k - $100k in current market.Its end user value could be in $150k - $250k range. So what's the right range to lease such a domain? for 3 years?
2. I think it's too risky and isn't comfortable to give the full control to the lessee although they can approve they are an established company and the agreement/contract protects me. However, since I have no experience on leasing domain, is this a reasonable requirement to let lessor and lessee both have the full control on the name?
3. How you normally ask the rental to be paid when leasing domain? upfront? yearly? quarterly?

And finally, your suggestions/opinions are much appreciated! and if you have done leasing before,care to share a copy of your agreement/contract via PM?

Thank you in advance.

 

[katherine]

3. They want to change the domain's administrative contact info to their company's while keeping the registrant contact info of mine.

The admin contact E-mail is used for authorizing transfers, so you should definitely remain the admin contact !

4. Transfering the domain to a new account at the current registrar and both party has access/full control to the domain name.

Same as above. They could change the admin contact. It's like a joint bank account. Whoever draws all the dough first wins
I think Domaincapital has custody of domains and even put their info in the whois of domains you finance thru them, until the loan has been paid in full.

Now you could look at the subaccount facilities offered by Fabulous for example. You could set a subaccount user with limited rights, like changing name servers only, if they need to. But you must retain ultimate control of the domain.

As for the rest it's a custom contract so you're free to set your own terms but consulting with a lawyer is a must, also to draft the contract. I would ask JBH

 

[owntag]

Thank you! sdsinc!!!

The sub-account facility suggestion is truly helpful. I haven't thought about it. Will certainly look into such service!

btw: Who's JBH, and how could I contact with him?

 

[dolansco]

JBH = http://www.johnberryhill.com/

 

[exxe]

The admin contact E-mail is used for authorizing transfers, so you should definitely remain the admin contact !

Are you sure? Is that the same with all the Registrars? I was thinking the registrant email account is the one that allows the transfers.

 

[owntag]

Thank you dolansco

Are you sure? Is that the same with all the Registrars? I was thinking the registrant email account is the one that allows the transfers.

I think sdsinc is right, since registrars always send authcode to the admin email, from my experience.

 

[exxe]

OK, thanks for the info.

 

[system0]

The owner of Self Made Minds has spoke a lot about leasing on his blog. I recommend searching for articles there or perhaps even contacting him directly for advice

 

[Biggie]

Hi

when leasing a domain, keep all info as your whois

keep the domain at your registrar

only change DNS for them to host the url


for fee's...get yearly payments in advance.

only give first option to buy if it's at a fixed price after a fixed time period, and they would have to express interest in exercising that option at some time prior to the end of the lease.

you also need an option for you, in case you get an offer above or at a price for which you would be willing to end the lease and sell ouright to another party. maybe a buyout clause, where you share some of the profit to the leasee, in the event you want to end the agreement.

also consider whether their usage will add value or depreciate the value of your name.

don't put yourself at a disadvantage any time during a lease.

imo...

 

[Johnn]

- Have a lawyer to prepare for the leasing agreement
- Don't allow them to touch the registrar/who is - You only need to change the DNS for them
- Are their business related to the domain name? Make sure that you have a clause in the agreement that would prevent them from filing against you to get the name from you during and after the lease.

GL

 

[Dale Hubbard]

Don is right. Your clause (4) is a real deal breaker. Always control the domain. And as Johnn suggest, DNS change is fine. You sound like a nice guy - don't get screwed.

 

[BostonDomainer]

The terms in your initial post seems rather sketchy. You may as well give them the domain. You definitely need a well structured contract with buy out options given the high value of the name. Biggedon's advice is on the money. As of now, there terms is far too much risk imo.

 

[Stian]

Hi, guys

A company reached me and shows interests in a domain name that I have. I haven't listed it for sale but I replied I might be willing to part with it and told them the expected price range. However, they couldn't afford to pay my asking price and they asked if I want to lease the domain name for 3 years. I said I have no experience and knowledge on leasing domain name and would like to know their terms for consideration.

Here are their terms:

1. Leasing the domain to them for full 3 years.
2. They pay $5k/year and will start the leasing in earlier 2009. They pay $2.5k at beginning, and pay $5k at the end of the year which inc the 1st $2.5k of 2nd year.
3. They want to change the domain's administrative contact info to their company's while keeping the registrant contact info of mine.
4. Transfering the domain to a new account at the current registrar and both party has access/full control to the domain name.
5. They have the priority of buying of the domain after 3 years.

I want to make sure if this is a fair leasing deal and if I am aware all the potential problems that might arise later on. The following info/questions are listed FYI.

1. It's a high value .com domain, and its resell value is around $80k - $100k in current market.Its end user value could be in $150k - $250k range. So what's the right range to lease such a domain? for 3 years?
2. I think it's too risky and isn't comfortable to give the full control to the lessee although they can approve they are an established company and the agreement/contract protects me. However, since I have no experience on leasing domain, is this a reasonable requirement to let lessor and lessee both have the full control on the name?
3. How you normally ask the rental to be paid when leasing domain? upfront? yearly? quarterly?

And finally, your suggestions/opinions are much appreciated! and if you have done leasing before,care to share a copy of your agreement/contract via PM?

Thank you in advance.

I wouldn't agree on changing any of the domain's contact info. You should instead set up a hosting account which they can administrate (including e-mail etc.). That way they will have full access to their website (I assume they want to put their website at your domain) and no administrative privileges on your registrar account (so they can't transfer, push etc.). I don't see why they would disagree on that. After all, all they want is to use your domain as their website/e-mails. Lastly I think $5k/year is not enough if your domain is worth $80k-$100k.

Oh and get an attorney to help you put together a proper legal contract, so they won't attempt anything stupid.

*2 cents paid..*

 

[simon]

i name which is worth about 150K$ it not giving in leasing for 5K per year. if the name is generic, just park the name and see how it performs in PPC revenue. i wouldnt lease the name for under 10K/year

 

[nameadvertising.com]

If they can't afford $150k now, most likely they can't afford it in 3 years either. Them being able to get first priority does not make sense. They will not pay you 5k-10k leasing money to get involved in a business for only 3 years and then get out of the lease shelving their business plan and investment. They will likely want to own the name as well.

If you truly believe your name can sell for stated price, make sure the lease reflects that price upon mutual agreement even before you grant them first priority. Do not leave that option murky at lease expiration. Formulate a lease agreement that protects you from any liabilities.

Seek an attorney. JBH is one of the best.

Good luck and all success with it.

NOTE : Also bear in mind, the domain name value will rise exponentially in 3 years. Factor that as well.

 

[owntag]

Thank you very much, guys! I haven't expected to receive so many replies so quick (it's Sunday! Happy hour!) Some replies have answered the questions in my mind which I forgot to ask in my OP!

Here are a little more info about the domain involved in this case. It's a LLdotcom. The interested party is a business consultant company. They can afford $100k and not more. Their business isn't related to the domain name directly. I should be in the safe side since it's a LL which are the initial letters of their business project. And the project title is also a generic term, not TMed.

The domain name comes with 170+ UV/day, but hasn't been monetized because it's a backup domain name (initial letters) for my wife's family business which hopefully will be started in 2010. Since it's a backup domain, I could consider to sell it when the right offer comes in.

Now with your suggestions, several questions are cleared.

1. I shouldn't let them have the full access/control on the domain. (The sub-account/access to NS/IP settings services are available in this case)
2. I do need a attorney to handle the leasing agreement. I will definitely contact JBH if the negotiation goes further.

Further questions:

1. What's a reasonable price tag for leasing a LLdotcom? Considering no monetization states or less than $5k/year.
2. If the company presented a bad business manner or activities when using the domain name, will it brings potential legal issue to me or affect my ownership to the domain name in future?

Thanks again!

 

[BostonDomainer]

Thank you very much, guys! I haven't expected to receive so many replies so quick (it's Sunday! Happy hour!) Some replies have answered the questions in my mind which I forgot to ask in my OP!

Here are a little more info about the domain involved in this case. It's a LLdotcom. The interested party is a business consultant company. They can afford $100k and not more. Their business isn't related to the domain name directly. I should be in the safe side since it's a LL which are the initial letters of their business project. And the project title is also a generic term, not TMed.

The domain name comes with 170+ UV/day, but hasn't been monetized because it's a backup domain name (initial letters) for my wife's family business which hopefully will be started in 2010. Since it's a backup domain, I could consider to sell it when the right offer comes in.

Now with your suggestions, several questions are cleared.

1. I shouldn't let them have the full access/control on the domain. (The sub-account/access to NS/IP settings services are available in this case)
2. I do need a attorney to handle the leasing agreement. I will definitely contact JBH if the negotiation goes further.

Further questions:

1. What's a reasonable price tag for leasing a LLdotcom? Considering no monetization states or less than $5k/year.
2. If the company presented a bad business manner or activities when using the domain name, will it brings potential legal issue to me or affect my ownership to the domain name in future?

Thanks again!

1) It totally depends on the LL.com despite monetization.
2) It could less a clause is included and agreed upon in the initial contract hence the need for a domain lawyer. Things obviously get more tangled when you start editing registrant and administrator detail.

If this is a serious leasing attempt, I would seize direct talk with the company and have JBH handle it. I personally think you are putting too much out there and the more you say the more libel you may become even if it is an LL.com. WIPO panelist aren't exactly the sharpest. k: Not worth the risk.