What to Look For In a Domain Name Lease Agreement
If you are looking into a generic top-level domain (gTLD) for either yourself or your business, chances are you have already researched the potential benefits. These new domain extensions allow for a creative mix in your SEO toolbox and can help you create a memorable URL while saving characters.
A lease agreement is a great way to capitalize on the rising stock of gTLDs while utilizing valuable capital in other areas. Much like all contracts, leasing a domain name is not the same across the board. These are the main things you want to consider and look for when discussing a potential domain lease agreement.
Rental vs. Lease to Own
Though they look similar on paper, the difference between having a rental agreement and a lease to own agreement can be significant down the road. Both options revolve around paying a regular monthly or annual fee to rent a domain, but the differences arise at the end of the lease terms. If you are pursuing a lease to own agreement, be sure to know if the rental payments lead to ownership or if there will still be a final payment after the lease to buy out the domain.
Know the Value
If you are leasing a gTLD, there may come a time that you will want to purchase the domain outright or transition to a lease-to-own. You should have a clear knowledge before entering an agreement on how the owner currently values the domain, and what, if any, could change that number between when you start your lease and consider a future purchase.
Who Controls the Domain
Part of establishing a strong relationship between yourself and the domain owner will be knowing who will hold the domain name during the lease. It can provide a sense of security to request a domain be held in escrow by a third party, especially if you are in a lease-to-own agreement. This protects you from having the domain sold to somebody else during your lease, and provides assurances of ownership to the original owner until the lease agreement is finalized.
Domain owners want to protect their property, so there may often be restrictions on use of the domain while in a lease agreement. They should be very clear with you on any such restrictions ahead of time. You will also want to do plenty of background research on your potential new domain to ensure you will not run into potential trademark issues. The last piece of your legal preparation should be gaining a clear understanding with the domain owner what their breach of contract process is should either party violate the terms of the agreement.
While it may seem like a lot to consider, you want to be sure that your domain lease agreement is the right fit for you and your business. As a general rule, you should treat the process with other lease-style transactions such as buying a car or renting an apartment: trusting your instincts and finding the right domain owner to work with can greatly improve your experience.