What to Do If Someone Backs Out of a Domain Deal | DomainInvesting.com
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What to Do If Someone Backs Out of a Domain Deal

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If you’ve been investing in domain names long enough, it’s likely that you’ve experienced one of the most frustrating things that can happen to a domain investor. You’ve agreed to buy a domain name and the owner decides to back out for some reason.

For some it’s just frustrating, but for others there are bigger issues. Perhaps you started building out the domain name before you were in possession of it, or maybe you contacted potential buyers hoping to quickly flip it. Whatever the case, it’s a disappointment to say the least.

You may have options of you have an agreement in place, even if you don’t have an “official” contract with the seller.

My first recommendation is to be in touch with the seller and let him know you are not satisfied with the situation, especially if there isn’t an error/mistake behind the deal breaking down. Discuss options for buying other domain names or work out some sort of agreeable financial settlement for your inconvenience.

If this can’t be worked out, let him know you plan to seek legal council to remedy the situation if necessary. I like to keep lawyers out these types of situations, but let the seller know that is an option and perhaps just that threat will get him to sell, especially if he was reluctant to sell due to a higher offer.

Let the person know you plan to blog/write about the situation on a domain forum. If the seller is wrong and doesn’t have a good excuse (ie he received a higher offer or just doesn’t want to sell anymore), others should be warned about this for the future. If you opt for this route, make sure you state the facts accurately because what is written can not be taken back.

If you’ve exhausted all efforts on your own, you should be in touch with a lawyer who has domain name and IP experience (see this list of domain name lawyers). A lawyer may be expensive, but if this is a key acquisition, you’ll want to know your legal recourse to complete the sale.


About The Author: Elliot Silver is an Internet entrepreneur and publisher of DomainInvesting.com. Elliot is also the founder and President of Top Notch Domains, LLC, a company that has sold seven figures worth of domain names in the last five years. Please read the DomainInvesting.com Terms of Use page for additional information about the publisher, website comment policy, disclosures, and conflicts of interest.


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Comments (10)

    adinfinite

    Great article Elliot. But what about when a buyer backs out? any thoughts/tips in that regard?

    December 29th, 2010 at 1:52 pm

    Rich

    Business ethics is not longer part of this world and I doubt it ever had much of a presence in the domain buyer/seller world.

    Without a firm contract, there is probably little that a potential buyer can do. Even with a contract, it is likely that any legal attempts to enforce the contract would cost far more than the value of the domain. If the domain seller renegs .. live with it. There are millions of people all over this country and tens of millions all over this world that are reneging on promises to pay back on mortgages, student loans, business loans, credit cards, etc. It is part of the new world that we live in.

    December 29th, 2010 at 2:05 pm

    Jacob

    I had someone named Bulent Ozcan back out of a deal for me for bloghosting.com about a year back. Very frustrating. I agreed to a buying price, we both agreed to escrow terms and then he found someone willing to pay more so he just backed out. It would’ve been too much trouble to do anything about it.

    December 29th, 2010 at 2:36 pm

    Elliot

    @ Jacob

    Annoying… but yes, sometimes you have to make a business decision about whether it’s worth the cost/time pursuing legal channels.

    December 29th, 2010 at 2:38 pm

    Domain Report

    Can’t say this has happened to me, but unless it’s a high value name and you have good legal resources, there isn’t much you can do.

    Has anyone ever had a buyer/seller back out of a deal, then somehow pressure them to actually follow through? I haven’t heard of any situation like that.

    I agree that one option is to blog or post in a domain forum about the incident, at least to warn others of the other party who reneged.

    In the aftermarket, the sale is never complete until the seller has the money in hand, and the buyer has the domain in their account.

    December 29th, 2010 at 2:57 pm

    Ed - Michigan

    EL,
    Had the seller back out on a name
    I won at a WELL KNOWN AUCTION.
    I paid MY money!

    There are problems when no teeth
    exist at an auction-house no less.

    JMHO,
    Ed – Michigan

    December 29th, 2010 at 4:08 pm

    Mr. Bean

    I agree with Domain Report. It’s probably not a good idea to start developing a domain or marketing it to potential buyers before you even have ownership of it. Wait until you’ve paid for the domain and it’s safely in your registrar account before doing anything with it. Chickens/hatched…

    December 29th, 2010 at 4:17 pm

    S

    It happened to me at a large auction house. The guy said he wanted more money and was tricked into listing the name. Although the auction house tried to get the transfer the guy bailed. I was told by a ip lawyer that although I may get judgment in the courts for the value it would be hard to get “specific performance” or the domain transfered.

    December 29th, 2010 at 11:10 pm

    Caitlin - BrandBucket

    Great advice. BrandBucket helps ease some of the struggle with selling a domain since we handle the sales for you.

    December 30th, 2010 at 2:49 pm

    Joseph Slabaugh

    Well check who that new customer was… bloghosting.com goes to http://www.godaddy.com/hosting/wordpress-hosting.aspx?ci=15005, meaning he probably got quite a bit more then with a sale to you. And it was probably worth the risk to the seller to risk upsetting you an the possible legal battle rather then keeping his word, so he toke the money and ran.

    January 3rd, 2011 at 5:34 pm

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