Warranties a buyer should ask a TLD seller for
The statements buyer's counsel should ask a TLD seller to give, why each one matters, how each is checked, and what no warranty can repair after closing.
Counsel who buy companies, portfolios or domain names know the warranty schedule as the place where a seller puts its name to what the buyer could not see for itself. In the purchase of an onchain top-level domain the schedule is shorter than in most deals, and each line weighs more. The asset is one token. There is no land registry behind it, no title insurer, and sometimes no long corporate history on the seller’s side.
What you are buying is a token: the registry records the TLD onchain, a wallet holds it, and whoever controls that wallet is the only party able to issue names under it. Much about it can be read by anyone. Much that matters cannot: who else can operate the wallet, what the seller has agreed with third parties, and what the seller knows about complaints. A warranty is the tool that turns those private facts into statements the seller answers for.
This article sets out the statements a buyer should ask for, the ones a seller can honestly give, the ones it cannot, and the limits of the whole exercise. It is information in general terms. Contract law, the meaning of a warranty and the remedies for a false one differ from country to country, and your own drafting decides the outcome.
Why warranties weigh more here, and what they should cover
In a conventional asset purchase, warranties sit on top of public registers, insured intermediaries and a seller with assets a judgment can reach. A TLD purchase removes most of those layers. The public record tells you which wallet holds the token and nothing about the person behind it. The registry records the token and applies its own terms; it is not a party to what the seller promised you. Plan on the basis that a completed transfer is not reversed because a statement in the contract was untrue. The contract is therefore the only instrument that connects the onchain fact to a person who can be held to account.
A warranty is worth exactly as much as the party who gives it. A flawless clause given by a seller you cannot identify or reach is a paragraph of text.
Start drafting by dividing the facts into two columns. The division tells you which questions belong in diligence and which belong in the contract.
The first column holds what the record shows. That record is open to everyone, and a block explorer is enough to consult it. From it you can read the wallet that holds the token, when the token was created, the transfers it has gone through, and the names that have been issued under the TLD. Asking a seller to warrant these facts adds little. You should check them yourself, on the day of signing and again on the day of closing, and keep a dated note of what you saw.
The second column holds what no record shows. It includes how many people can operate the seller’s wallet, whether the seller has given an option or a right of first refusal to someone else, whether it has undertaken to issue particular names, on what terms it takes part in the registry’s royalty program, and whether it has received a complaint from a trademark owner. These facts live in the seller’s head, its correspondence and its contracts. A warranty, supported by a disclosure process, is the only way to reach them.
A third category sits between the two: facts held by the registry. The terms on which a TLD was registered, and the conditions of the royalty program that applies to it, are matters between the holder and the registry. The seller can state what it believes, and the registry can confirm what is so. For this category the right instrument is a confirmation obtained before closing, with a warranty behind it as a second line.
The warranty schedule for a TLD, line by line
The table gives the core schedule. The main lines are developed in the sections that follow, with the points where a careful seller will ask for a qualification.
| Warranty | Why it matters | How it is checked |
|---|---|---|
| Seller alone controls the holding wallet | Control is the practical equivalent of title | Public record for the wallet; seller’s statement for who can operate it |
| Authority to sell | A token can be held for a company or a group | Corporate documents, or consent of co-holders |
| No other promise over the TLD | Options, pledges and side deals are invisible onchain | Disclosure letter; no public check exists |
| State of names issued | Names sold to third parties stay with them | Count on the public record; seller’s schedule of who holds what |
| Royalty program terms | Earlier and later terms differ in cost | Confirmation from the registry before closing |
| No known dispute | A complaint follows the string, not the seller | Seller’s statement, limited to its knowledge |
| Accuracy of information supplied | The buyer priced the asset on it | Comparison with the record and with documents |
A TLD with a website or with names in commercial use will call for more lines. These seven are the floor.
Sole control of the wallet: the statement that stands in for title
Lawyers trained on registered property look for a title warranty. For a token, the closer concept is control. Whoever can operate the wallet can transfer the TLD and can issue names under it. The warranty you need is therefore about people and keys, not about a certificate.
What to ask the seller to state
Ask the seller to state that it is the holder of the TLD, that the wallet shown on the public record is its wallet, and that no person other than those it has named can operate that wallet. A key, in this context, is the secret that authorizes transactions from a wallet; anyone who has a copy can act as the holder. The statement should therefore extend to copies and backups: that no other person holds the recovery phrase or any other means of access.
If the wallet requires several approvals before it acts, the statement names the approvers and confirms that all the required ones have agreed to the sale. If the seller is a company, add the ordinary corporate warranties: that it exists, that the sale has been approved by whoever must approve it, and that the individual signing the contract has authority to do so. If the token is held by one person on behalf of several, you need each of them as a party or their written consent.
What the seller cannot honestly state
A seller cannot warrant that its key has never been exposed to anyone. No one can prove a negative of that kind. The honest form is a statement of knowledge: the seller is not aware of any unauthorized access, and has not shared the means of access with anyone other than the named persons.
Why this warranty has a short working life
This is the one line of the schedule whose main risk ends at closing. When the token moves to a wallet the buyer controls, former access to the seller’s wallet no longer gives anyone power over the TLD. The warranty matters for the period before closing, when a third person with access could move the token elsewhere or issue names you did not expect.
No other promise over the TLD
The next line addresses what the seller may have agreed with others. None of it shows onchain, and all of it can reach the buyer.
Ask the seller to state that it has not sold, agreed to sell, optioned, pledged or otherwise granted any right over the TLD to another person. Then go beyond the token itself, because the valuable promises are often about what happens under it. A seller may have promised a partner a set of names. It may have agreed to share registration income with a co-founder or a developer. It may have granted someone the right to operate the namespace for a period under a contract, with the seller issuing names on that person’s instruction. It may have told a community that certain names would be free or reserved.
The practical problem is not only legal, and whether a buyer of an asset is bound by the seller’s contracts varies by country. A person who was promised a name, and finds a new holder who will not issue it, will complain and may claim against the seller, who will then look to the buyer for cooperation.
The warranty therefore does two jobs. It gives a remedy if an undisclosed promise surfaces. More usefully, it forces disclosure before signing. A careful seller will come back with a list of the promises there are. You can then decide which promises the seller must close out before the transfer, which the buyer is content to honor, and which change the price.
Ask also for a statement about the string itself: that the seller has not undertaken to any person to give up, restrict or refrain from using the TLD. A settlement with a past complainant, for example, could contain such an undertaking, and it would matter a great deal to the next holder.
The state of the names issued under the TLD
A TLD is rarely sold empty. Names may have been issued under it, to the seller, to its associates or to paying third parties. The buyer needs to know what it is getting and what it is not.
The count is a public fact: the names issued under a TLD can be read from the record. Who stands behind each one is not. Ask the seller for a schedule that sorts every issued name into three groups: names the seller holds itself, names held by persons connected to the seller, and names held by unconnected third parties. The warranty is that the schedule is complete and accurate.
The three groups are treated differently. Names the seller itself holds can pass to the buyer with the TLD if the contract says so, and the schedule should say which ones do. Names registered by third parties remain with those third parties after the sale. The buyer acquires the TLD subject to them. Names held by connected persons deserve a direct question: are they staying with those persons, moving to the buyer, or being given up, and has the connected person agreed in writing?
Do not ask the seller to warrant that the buyer will be able to withdraw or change a name already issued. Whether a holder can do that is a case-by-case matter, and a seller who warrants it is promising something outside its gift. If a specific name is a problem for you, such as one that matches a third party’s mark or one that sits where you intended to put pay.yourbrand, deal with it as a condition before closing and do not rely on a general statement.
Two further statements round out this line. The seller confirms on what terms each third-party name was issued, including any terms of use it published and any price or duration it promised. And it confirms that it has not issued, and before closing will not issue, any name outside the schedule.
Royalty program terms: a statement the registry must confirm
On Freename, a holder can take part in a royalty program under which it receives a share of the registration fee of each name registered under its TLD, subject to the registry’s terms and activation conditions. Holding the TLD carries no annual renewal fee. Taking part in the program does carry an annual cost, set by the registry. Earlier registration terms, which still apply to some TLDs, included the program for life.
For a buyer who has priced the TLD partly on registration income, the regime that will apply after the transfer is a central fact. It is also a fact the seller does not control. Whether earlier terms pass to a new holder is decided by the registry, and it is confirmed with the registry before closing.
Draft this line in two parts. In the first, the seller states facts about its own account: under which terms the TLD was registered, whether the program is active for it, whether every amount due to the registry has been paid, and whether it has received any notice about its participation.
In the second part, resist the temptation to have the seller warrant how the registry will treat the buyer. The seller cannot know, and a warranty about a third party’s future conduct is a weak thing to litigate. Make the registry’s confirmation a condition instead: the buyer is not obliged to close until the registry has confirmed, in writing, the terms that will apply to the TLD in the buyer’s hands. If the confirmation differs from what the parties assumed, the contract says what happens: a price adjustment the parties negotiate, or a right to walk away.
A seller may also supply figures for past registrations. A warranty that those figures are accurate is reasonable; a warranty that they will continue is not, since volume depends on what the next holder does.
No known dispute, and the weight of the knowledge qualifier
The last substantive line concerns claims. A trademark owner who objects to a TLD objects to the string and to its use, whoever holds it. A complaint addressed to the seller before closing does not go away at closing. It arrives, sooner or later, at the buyer.
Ask the seller to state that it has received no claim, demand, complaint or notice about the TLD or any name under it, from a rights holder, a registry, a platform, a public authority or anyone else, and that it is not aware of circumstances likely to give rise to one. Ask for copies of anything it has received, however informal.
What “to the seller’s knowledge” should mean
A seller will rightly limit this warranty to what it knows. No holder can state that the string infringes no right anywhere in the world; trademark rights are territorial, numerous and partly unregistered. The negotiation is about how the qualifier is defined. A broad definition covers what the seller knows and what it would have learned from the inquiries a reasonable holder makes, such as reading its own correspondence. Where the seller is a company, the definition names the people whose knowledge counts. How courts read these formulas varies by country, so write the definition out and do not rely on a stock phrase.
What this warranty does not replace
A no-dispute warranty tells you about the past. It tells you nothing about whether the string conflicts with someone’s mark. That question is yours to answer through clearance, with your own trademark counsel, before you sign. A free first check is the form on the page that explains what trademark TLDs are, and it is a starting point for clearance, not the clearance itself.
What a seller’s warranty cannot fix
A complete schedule still leaves limits that no drafting removes. A buyer who understands them plans around them.
It cannot undo the transfer. Once the token has moved and the price has been released, a false warranty gives you a claim for money against the seller. It does not give the token back to anyone, and it does not restore the position before the deal. Depending on the governing law and the wording, some statements may also allow the contract to be set aside, which is a question for your own counsel and a difficult remedy to apply to an asset of this kind.
It cannot make the seller solvent or reachable. A claim is only as good as the defendant. A seller who is an individual in another country, or a company with no other assets, may be impractical to pursue. This is the strongest argument for knowing who the seller is before you sign, even where the seller’s name is kept confidential from everyone else under the mutual NDA that covers the exchange.
It cannot bind the registry, a wallet or a browser. The seller can state how things stand. It cannot promise that the registry’s terms will stay as they are, or that the software which resolves the name will go on doing so. Resolution of onchain names happens outside the DNS, support in wallets and browsers is partial and changes, and no seller is in a position to warrant otherwise. A buyer whose plan depends on universal reach should weigh the comparison between an ICANN dotBrand and an onchain TLD before it weighs the warranties.
Because of these limits, pair the schedule with protections that operate before the money moves or shortly after.
| Limit of a warranty | What to add beside it |
|---|---|
| Remedy is money, after the fact | Conditions that must be met before closing |
| Seller may be hard to reach | Identified seller; part of the price retained for a period, if agreed |
| Facts change between signing and closing | Covenants, and repetition of warranties at closing |
| Third parties are not bound | Written confirmation from the registry |
| Simultaneous exchange is not guaranteed by contract alone | Onchain escrow at closing |
Onchain escrow answers one question only, the one any escrow answers: who performs first. It does not test the truth of any warranty. A retention of part of the price is a familiar device in asset sales; whether it suits a given TLD purchase is a point of negotiation and of local law.
Disclosure, covenants and repetition at closing
Three mechanisms make the schedule work in practice.
Disclosure comes first. A seller answers the warranties with a disclosure letter that lists the exceptions: the names promised to a partner, the inquiry received from a brand, the co-founder who once had access to the wallet. In many legal systems a matter fairly disclosed cannot later found a claim, though the rule varies by country, so read the letter as closely as the contract. General disclosures, such as “everything on the public record” or “everything in the correspondence supplied”, shift risk to the buyer quietly. Accept the public record as disclosed, since you can read it. Ask for specifics on everything else.
Covenants cover the gap between signing and closing. The seller undertakes, during that period, not to issue any name under the TLD without the buyer’s consent, not to transfer or encumber the token, not to change its participation in the royalty program, not to alter the records attached to the TLD, and to tell the buyer at once of any complaint or notice. The no-issuance covenant matters most, because issuing is quick, visible only after the fact, and may not be something the next holder can undo.
Repetition closes the loop. The warranties are given at signing and given again at closing, so that a change in between is the seller’s risk. The buyer supports it with its own second reading of the record.
- Read the record before draftingNote the holding wallet, the creation of the token, its transfers and the names issued under it. Remove from the draft any warranty that only repeats what you have read.
- Send the schedule earlyGive the seller the draft warranties before price is final. The exceptions it raises are information you want while you can still act on it.
- Obtain the registry's confirmationAsk, with the seller's cooperation, for written confirmation of the terms that apply to the TLD and of whether they pass to the buyer.
- Settle the disclosure letterTurn each general disclosure into a specific one. Decide which disclosed matters become conditions, which change the price and which you accept.
- Sign with covenants in forceFrom signing, the seller issues no name and grants no right without your consent.
- Re-read the record on the dayCompare the names issued and the holding wallet with your note from step one. Obtain the seller's closing confirmation, then close through escrow.
Survival is the last drafting point: state how long after closing a claim may be brought. Limitation rules and the enforceability of contractual time limits vary by country.
Preparing your warranty schedule before the first draft arrives
The practical next step is small. Take the seven lines of the table and, for each, write down the fact you can verify alone, the fact only the seller knows, and the fact the registry must confirm. That one page tells you what to check, what to ask and what to make a condition.
The warranties themselves, and the advice on them, are for you and your client to settle; nothing here replaces that. Where a purchase goes through Hush Partners, the stages from mandate to transfer are set out on the page that describes how a file runs. An organization can mandate the desk to find and approach a holder as a buy-side acquisition, and there is a page for advisers who refer a file. The desk is reached through the contact form.
Questions people ask
Should the buyer give warranties too?
Usually a few. The seller will want the buyer to state that it has authority to buy, that it can pay the price, and in some cases that it is acting for itself or for a principal it has disclosed to the intermediary. A seller concerned about how the string will be used may ask for an undertaking on use.
Can a seller sell “as is”, with no warranties at all?
It can propose it, and some holders will. The buyer then relies entirely on what it can verify itself, which covers the holding wallet and the names issued and leaves the private facts open. Even a seller who refuses a full schedule will often give the two statements that cost it nothing if they are true: sole control, and no other promise.
What if the seller wants to stay anonymous to the buyer?
Then the warranties are given by someone the buyer cannot pursue, and their value falls accordingly. Identification to the buyer’s counsel only is one arrangement the parties can discuss. A buyer should decide early how much it needs to know about the person behind the wallet, since the answer shapes the whole contract.
