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Since he’s now put himself behind the 8-ball by registering his business under this domain name, can’t you now just hike up the price of the lease (and don’t lease it to someone else). Since you own the domain name, he’s now in a position of need from you.

Surely there wouldn’t be any issues since you registered the domain name before he registered his business?

Would be a nice place to be in come the next leasing negotiations if it turns out you weren’t in a position to have legal issues.