Can you try to sell a domain you bought on a lease-to-own plan?

Atom’s terms forbid it. GoDaddy’s terms don’t.

Is it OK to try to sell a domain name that you are buying through lease-to-own?

Marty Ringlein was shocked to find that a domain he’s leasing out is listed for sale on Atom at a huge multiple over what the buyer is paying him.

(Marty knows a lot about domains. He’s a co-founder of Agree, which uses agree.com, and he owns Marty.com. He was on DNW Podcast #507.)

I wasn’t as shocked as he was, and there’s a debate about this practice in response to his post.

As a domain buyer, if you can pay a domain off over time without paying interest, that’s a good thing. If you sell it in the interim, you just pay it off early to complete the transaction.

Yesterday, I dug into the terms at both Atom and GoDaddy to understand where they sit on this issue.

Atom

If you buy a domain on Atom with a payment plan, you are not allowed to list it for sale on a marketplace until you pay it off. The policy does not say you can’t try to sell it, though.

Here are Atom’s restrictions:

• During the payment plan, the domain may not be used for any illegal activities, including Spam, Phishing, or Deceptive services. Violating this policy may result in immediate termination of the payment plan.
• During the duration of the payment plan, the domain may not be listed for sale on Atom’s platform or any other domain marketplace or registrar.

Furthermore, in response to Marty’s post, Atom said you aren’t allowed to list domains on Atom that you are leasing elsewhere.

Afternic

Afternic’s restrictions are more spelled out. Here are the relevant terms:

1. Buyer agrees to use the LTO Domain only in accordance with any applicable laws and/or regulations, and with all duty and care. For the avoidance of doubt, Buyer is prohibited from using the LTO Domain in a manner (as determined by GoDaddy in its sole and absolute discretion) that:
   1. in breach of any applicable law, statute, or regulation;
   2. is fraudulent, criminal or unlawful;
   3. promotes racism, bigotry, hatred or physical harm of any kind against any group or individual;
   4. infringes or breaches the patent, copyright, trademark, trade secret, right of publicity or other intellectual property) rights of any third party;
   5. contains video, audio photographs, or images of another person without his or her permission (or in the case of a minor, the minor’s legal guardian’s permission);
   6. provides information on any illegal activity (including, but not limited to, instructional information on acquiring or fabricating illegal weapons or drugs, privacy violations or distributing computer viruses);
   7. publicizes or promotes commercial activities an/or [sic] sales without our prior written consent such as contests, sweepstakes, barter, advertising, and pyramid schemes; or
   8. involves the use, delivery or transmission of any viruses, harmful code, unsolicited emails, Trojan horses or any other computer programming routines that are intended to disrupt, damage, detrimentally interfere with, surreptitiously intercept or expropriate any system, data or personal information.

2. Buyer acknowledges and agrees not to engage in any activity with the LTO Domain or using the LTO Services that would decrease the value of the LTO Domain. Such activities include, but are not limited to, the use of aggressive SEO strategies, techniques and tactics that focus only on search engines and not a human audience, and usually does not obey search engines guidelines (black hat SEO), such as keyword stuffing, invisible text, doorway pages, adding unrelated keywords to the page content or page swapping (changing the webpage entirely after it has been ranked by search engines), and the use of the domain name for spam activities.

3. Buyer may not grant any third party any rights to the LTO Domain, including any right to use the LTO Domain.

4. Buyer agrees to protect, defend, indemnity and hold harmless GoDaddy and its officers, directors, employees, agents and third party service providers from and against any and all claims, demands, costs, expenses, losses liabilities and damages of every kind and nature (including, without limitation, reasonable attorneys’ fees) imposed upon or incurred by GoDaddy directly or indirectly arising from (i) your use of the LTO Services; (ii) your violation(s) of any provision of this Agreement; and/or (iii) your violation of any third party right, including without limitation any intellectual property or other proprietary right. This indemnification obligation shall survive any termination or expiration of this Agreement or your use of the LTO Services.

These terms do not specifically forbid listing the domain on marketplaces. They state that, “Buyer may not grant any third party any rights to the LTO Domain, including any right to use the LTO Domain.” That’s not what domain sellers are doing; they will buy out the domain before granting rights.

That said, the agreement does have broad protection against doing something that “would decrease the value of the LTO domain.”

I suppose that could include, say, sending emails to trademark holders offering the domain for sale.

As a domain seller, I don’t love the idea of trying to sell a domain I’m leasing out. But I set a price, and if they’re willing to pay it and think they can get more, good for them. The problem is if they somehow tarnish the domain with their efforts. (Oh, and if a lot of people are doing this with your domains, you must be underpricing them.)

For what it’s worth, this week I bought a domain on a payment plan from HugeDomains and have listed it for sale.