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What happens if I don’t repay my loan by the due date?

Failing to repay your loan by the due date can result in the permanent loss of your property token.

Daniel Rollingher avatar
Written by Daniel Rollingher
Updated over 2 weeks ago

Consequences of Default

If you do not repay your loan on time, you will lose ownership of your property token. There are no redemption rights or deficiency judgments. Recovering your property after default can be extremely difficult or impossible.

Fabrica has no control or ability to intervene once liquidation begins due to the decentralized nature of the lending protocols.

How Default and Liquidation Processes Work

Instant Liquidity Loans (Metastreet)

  • Upon default, your property token is placed into a public auction on Metastreet.

  • Auctions begin with the first bid and last a minimum of two weeks. The auction period extends with each new bid until no further bids are placed.

  • The property token is transferred to the highest bidder.

  • If the auction price exceeds your outstanding loan amount, the excess funds are returned to you.

  • If the final auction price is less than your outstanding loan, you receive nothing.

  • Regaining your property after auction is not possible unless you independently negotiate and buy the property from the new owner.

Custom Loans (NFTfi)

  • Defaulting immediately allows the lender to claim your property token without an auction.

  • You can attempt to renegotiate directly with the lender; however, the lender is under no obligation to agree.

  • If renegotiation fails, the lender takes full ownership, and you receive no compensation.

Fabrica Email Notifications

If you've provided your email address, Fabrica will remind you about your loan repayment by email:

  • 5 days before the due date

  • 24 hours before the due date

Important: Notifications can occasionally be marked as SPAM, or experience temporary malfunctions. Always have alternative reminders or methods in place to ensure timely payment. Defaults will occur regardless of any notification issues.

Despite these reminders, repayment responsibility lies solely with you. Fabrica cannot intervene or reverse the default process managed by decentralized smart contracts.

Alternative Ways to Repay Your Loan

If the Fabrica website becomes inaccessible for any reason, you can still repay your loan directly through the Nftfi or Metastreet websites or by interacting directly with their respective smart contracts.

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