A little while back I set up my first subdomain (
.ens.punks) and to my amazement someone on Twitter DM’d asking if I’d create 
.enspunks.eth for them ( I agreed to do this for free thinking that is awesome).
However, the lawyer part of me began thinking about potential liabilities. So I was wondering if anyone is currently creating subdomains for 3rd parties under the current (pre-namewrapper) subdomain system and might share their insights.
I know I have power to revoke control under the current system, but are there any best practices for subdomains with respect to potential bad-faith actors misusing a subdomain based on my root?
Maybe a standard TOC/EULA being used to indemnify myself and/or waiver of any damages should I revoke control from the 3rd party in my discretion or based on specific acts? IRL contracts might require a bond or deposit, or even a liquidated damages clause in certain instance, which I’m sure is unnecessary, but just some additional thoughts I had that probably translate well to subdomains usage.
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We should probably develop a simple subdomain contract and liability waiver.
You really need to be careful about revocation. Misuse by bad-faith actors would need to be strictly and carefully defined upfront (TOC/EULA). Nevertheless, the ability to revoke could, in and of itself, expose the Registrant to vicariously liable claims for any torts or malfeasance, as the power of revocation opens the door to claims of a failure to monitoring/oversight, notwithstanding the existence of a waiver.
As for a liquidated-damages clause, they are only useful between commercial parties who are willing to fund litigation and where the offending party as the ability to pay the judgment.
In my view, it is best to keep the subdomain transaction one in which the Registrant agrees to give up all control over the subdomain except for renewal registration. The subdomain could be assessed a portion or a fee to go towards the renewal of the Primary ENS name. Also, you could be litigating the validity of the waiver by the third-party.
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