What happens when a loan defaults
When your loan defaults, two things are true:
You still own your property token and remain the beneficiary of the trust.
The lender now has the right to initiate liquidation to recover the collateral.
Liquidation is not automatic. It requires action by the lender and, depending on the loan type, includes notice periods during which you can still repay and keep your property.
How liquidation works by loan type
Instant Liquidity Loans (MetaStreet)
Anyone can initiate a public auction on MetaStreet by placing a bid on a defaulted loan.
Once a bid is placed, the auction runs for 24 hours. If a new bid comes in, the timer resets.
If the auction price exceeds your outstanding loan amount, the excess is returned to you.
If the price is less than your outstanding loan, you receive nothing.
You can repay your loan at any time before the auction completes to reclaim your property token.
Custom Loans (NFTfi)
The lender can claim your property token after default, but must follow applicable legal notice requirements before doing so.
During the notice period, you have the right to repay the full outstanding amount and reclaim your property.
If you do not repay within the notice period, ownership of the property token transfers to the lender.
Your rights after default
Under applicable law, you may have the right to redeem your property by repaying the full outstanding loan amount (plus any accrued interest and expenses) before liquidation is complete. Each notice you receive will explain your specific redemption rights and deadlines.
Fabrica email notifications
If you've provided your email address, Fabrica will remind you about your loan repayment:
5 days before the due date
24 hours before the due date
Important: Notifications can occasionally be marked as spam. Always set your own reminders to ensure timely payment. Default will occur regardless of any notification issues.
Repayment responsibility lies solely with you.
Alternative ways to repay your loan
You can repay your loan through the Fabrica website, directly through the NFTfi or MetaStreet websites, or by interacting directly with their smart contracts.