How should platforms handle late payments in domain lease-to-own agreements?

A recent case raises questions about grace periods, buyer notifications, and balancing interests between sellers and buyers.

I recently received an email from a distraught GoDaddy customer. He told me he had been making lease-to-own (LTO) payments on a domain name for over two years, totalling about $3,000.

He went on vacation and, when he returned, was surprised to learn he no longer had the domain name.

While he was gone, GoDaddy tried to charge his credit card for the monthly payment. The card was declined. After sending three reminders, GoDaddy returned the domain to its owner.

The process is what you’d expect when a lease-to-own payment isn’t made, but the customer believed he should have been given more time to make the payment.

The records he sent me show that GoDaddy sent at least three emails warning him that his payment method failed and he was subject to losing his product. They were sent on June 23, June 27, and July 2. Assuming the domain wasn’t removed from his account until at least July 2, this suggests GoDaddy gave him at least a nine-day grace period to make the payment.

GoDaddy’s Terms of Service do not offer any grace period for LTO payments. The company told Domain Name Wire that it does not disclose an exact grace period on LTO domains. However, a spokesperson said:

Our goal is to help every Lease to Own buyer succeed. If a payment is ever missed, we kick off our support process, sending several follow-ups to keep the Lease to Own on track. If, despite our efforts, the missed payment can’t be resolved within this window, we’ll return the domain to the original seller so they can relist it.

Atom, a competitor, offers a 10-day grace period, which seems to be in line with what GoDaddy provides.

In a blog post (clearly written with AI), the buyer suggested that GoDaddy’s actions were a nefarious way to make more money.

I disagree because all parties lost: the domain buyer, GoDaddy (which makes less commission), and the seller.

Yes, the seller. In most cases, especially for lower-cost domains, a domain seller would prefer to get the final 25%-50% of payments rather than get the domain name back.

There seem to be a few things that could be improved to ensure fewer LTOs are canceled by accident due to missed payments.

• Extend the grace period – Ten days does seem a bit short. As a seller, I don’t want a huge delay. But I’d like to give the buyer every chance to make the payment. Perhaps there’s a longer grace period for a first missed payment and a shorter one after that.
• More contacts – In the case of an expensive product like an aftermarket domain sale, would it make sense to text or call the buyer to let them know they are in jeopardy of losing the domain?
• Better email communication – All three of the emails the customer received had the subject line: “[Customer Name]: Product Failed Billing Notification”. Compare this to the warnings GoDaddy sends when a domain expires, such as “Urgent: Your domains cancel in in 5 days” and “Renew your expired domains before you lose them.” While better subject lines wouldn’t have made a difference in this case, they could grab the attention of the buyer.

Ultimately, it’s the buyer’s responsibility to make sure their payments are made on time. There’s no guarantee of a grace period. That said, I think improvements to the process could be made to ensure everyone wins in this scenario: the buyer, GoDaddy, and the seller.