What is Domain leasing?

Domain leasing is just like leasing a car. As lessee, you have the right to use a domain name for a specified period, making periodic lease payments to the lessor. Most domain leases will have the option for the lessee to purchase the domain name outright. Leasing suits the lessee because initial cash outlay is lower for premium domains.

Lease term:
Typically 2 years with monthly or quarterly payments.

Lease Payment:
Ranges from 1% of purchase amount per month, upwards.

Purchase:
Domain name leases will usually have a purchase option allowing the lessee to purchase the domain name outright.

Example:
Jackson wants to use the premium domain name Forty.online to start a new business. Jackson and the owner of Forty.online agree on the sale price of $US12,000 but Jackson doesn’t have the cash, so they agree on the following lease terms:

  • Lease Period: 2 years(24 months)
  • Down Payment: $120.00
  • Lease Payment: $120(1%)
  • Purchase Option: $15,000

Benefits to Jackson:

  1. If the value of the domain increases (especially through his own efforts), he has the right to buy at the capped price.
  2. If business idea doesn’t work out, his outlay is minimal.
  3. Certainty: Domains names are only going to go higher

Risks to the domain holder:

  1. Unauthorized use of trademark or copyright material.
  2. The value of the domain may increase

Other considerations:

  1. Identity of the lessor: Don’t get scammed.
  2. Is the lessee is an individual or a company?
  3. Prohibited uses of the domain & indemnity
  4. Right to terminate in the event of late payment
  5. Lease never implies transfer of ownership

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