The purpose of this advisory is to assist ICANN-accredited registrars in understanding the effect of transfers of sponsorship of registrations between registrars that occur while a name is within the Auto-Renew Grace Period.
The Grace Period Policy for every TLD for which ICANN accredits registrars is set forth in Appendix C to the relevant registry agreement. In the case of .com, .net, and .org TLDs the policy is available at <http://www.icann.org/tlds/agreements/verisign/registry-agmt-appc-16apr01.htm#3>. Similar policies will apply in .biz, .info, and .pro, but will not have effect until registrations in these TLDs begin expiring in late 2002. Accordingly, this advisory uses the .com/.net/.org policy as an illustration.
The Grace Period Policy defines the "Auto-Renew Grace Period" as follows:
"The Auto-Renew Grace Period is a specified number of calendar days following an auto-renewal. An auto-renewal occurs if a domain name registration is not renewed by the expiration date; in this circumstance the registration will be automatically renewed by the system the first day after the expiration date. The current value of the Auto-Renew Grace Period is 45 calendar days."
In other words, when a domain-name registration reaches its expiration date, it gets renewed for one-year automatically by the registry. The .com/.net/.org registry charges the registrar a US$6.00 fee for the new one-year registration term. The registration is then subject to the "Auto-Renew Grace Period", under which the following special rules regarding transfers between registrars apply:
Transfer (other than ICANN-approved bulk transfer). If a domain is transferred under Part A of Exhibit B to the Registry-Registrar Agreement within the Auto-Renew Grace Period, the losing Registrar is credited with the Auto-Renew charge* and the year added by the Auto-Renew operation is cancelled. The expiration date of the domain is extended by one year up to a total maximum of ten by virtue of the transfer and the gaining Registrar is charged for that additional year, even in cases where a full year is not added because of the 10-year maximum limitation.
Bulk Transfer (with ICANN approval). Bulk transfers with ICANN approval may be made during the Auto-Renew Grace Period according to the procedures in Part B of Exhibit B to the Registry-Registrar Agreement. The expiration dates of transferred registrations are not affected. The losing Registrar's account is charged for the Auto-Renew.
(*Note: this is true despite the language in Appendix G that states that "The losing registrar's registration fees will not be refunded as a result of any ... transfer." In effect, the losing registrar is not receiving a refund of paid registration fees, it is just in a position to avoid incurring a permanent charge for the one-year registration term going forward.)
Based on these rules (again, these are the current rules from the .com/.net/.org registry "Grace Period Policy"), registrars receive a credit equal to the US$6.00 auto-renewal fee for every registration that is transferred away within 45 days of its auto-renewal.
The rationale for this "refund rule" with respect to names that are transferred away during the Auto-Renew Grace Period is that the losing registrar will no longer be sponsoring the name in the registry for the remainder of the year and should not bear the cost of maintaining its registration. The gaining registrar is charged US$6.00 for the one-year associated with transfer of sponsorship of the name. The system's design allows registrants to transfer their names to a new registrar within 45 days after the expiration of their registration with no resulting registry fees to the losing registrar.
Registrants who transfer names within the 45-day Auto-Renew Grace Period should check with the registrar from which they are transferring regarding a possible refund. Even though losing registrars receive refunds of auto-renewal fees they have paid to the registry in these circumstances, not all registrars make refunds to customers. The effect of failure of the losing registrar to refund is that the registrant pays registration fees to both the losing registrar (for the auto-renew) and to the gaining registrar (for the transfer), but only receives a one-year extension of term.
In summary, registrars should note (and advise their customers) that in most cases where a name is transferred within 45 days after its expiration/renewal date, the successfully transferred registration will only be extended by one year, not two years as might be expected. In such cases, the transfer during the Auto-Renew Grace Period simultaneously triggers a removal of the auto-renewed year and a credit to the losing registrar, and a charge to the gaining registrar for the year added to the registration term as a result of the transfer.