Fires, floods, storms and other disasters are rare, but they happen. This article explains exactly what SecondaryDAO does if a property you hold tokens in is destroyed or badly damaged, and what you can expect along the way. No one likes surprises when it comes to their money, so here is the whole process up front.
The short version
- The property's funds are wound down and paid out to token holders, in proportion to the tokens they hold, the same way net rent is paid.
- Payouts come in rounds, because the money arrives in stages: funds already held for the property first, then insurance, then possibly a land sale.
- Renters get their deposits back. Rental and security deposits belong to the renters and are never paid out to token holders.
- SecondaryDAO charges a 2% management fee on each round it pays out.
- Every payment is recorded against a real blockchain transaction that anyone can verify.
Step 1: The event is declared
When a property suffers a major loss, a SecondaryDAO compliance officer formally declares a force majeure event for that property. The declaration records what happened, when, and the reason, and it opens a permanent audit trail for everything that follows.
Step 2: Two people must approve every step
No single person can move money on their own. The compliance officer who declares the event cannot approve it. A second, independent compliance officer must review and approve each step: the impact assessment, the legal review and the financial approval. Approvals happen in order, and a rejection is final.
Step 3: What gets paid out
For each payout round, SecondaryDAO works out the amount available:
- Start with the funds that came in for that round. That can be money already held for the property (its escrow and reserves), an insurance payout, or proceeds from selling the land.
- Set aside renters' deposits. Rental and security deposits belong to the renters and are returned to them. They are never part of what token holders receive.
- Deduct SecondaryDAO's 2% management fee. In the event of a catastrophic incident, or a payout for a total or near-total insurance loss, SecondaryDAO earns 2% of the amount available in each round for managing the funds paid out.
- Pay out the remaining 98%. It goes to token holders exactly as net rent would.
Step 4: Who receives what
Each round is split in proportion to the tokens held, following the same rules as a net rent payment:
- Token holders receive the share their tokens would receive as net rent.
- Seller-held tokens. While SecondaryDAO holds unsold tokens on behalf of the property's seller, the seller receives the rent from them, and so the seller receives their share of a payout too.
- Tokens in the middle of a trade or buyout are paid to their owner of record, just like rent.
- Any share that can't be paid to a person goes to the SecondaryDAO treasury. For example, if the rules that stop a restricted wallet from receiving rent also apply to this payout, that share goes to treasury.
If you had placed a buy order that hadn't been filled, you didn't own those tokens yet, so you simply get your locked funds back. Tokens you bought in a property sale are delivered to you in the same transaction you pay in, so there is never a gap where you have paid and don't hold your tokens.
Hold your tokens to be paid
Each payout round is paid to whoever holds the tokens at the moment that round is calculated, the same way rent is. If you sell your tokens before a round, the buyer receives that round and any later ones; you keep whatever earlier rounds already paid you. If your KYC isn't complete when a round is calculated, your share is held for you and paid once you finish KYC. A share that can't lawfully go to its holder (for example a blocked wallet) goes to the SecondaryDAO treasury.
Trading stays open during a loss event, so you can sell your tokens if you want out. An affected property is clearly labeled as being in a loss situation wherever its tokens are listed, and anyone buying its tokens is shown a warning and must confirm before the purchase goes through.
Step 5: Payouts come in rounds, and that takes time
Money from a disaster rarely arrives all at once:
- Funds already held for the property can be distributed first.
- Insurance payouts often take months.
- Selling the land may take a year or longer.
Each time new money arrives, SecondaryDAO runs another round using the same rules. You receive your share of every round, and the total you receive reflects everything the property ultimately recovers.
Step 6: How you are paid, and how you can check it
Payments are sent from the SecondaryDAO treasury to your wallet. A payment is only recorded as sent once its blockchain transaction has been verified: mined, successful, and for the right amount to the right wallet. You can look up any payment on the blockchain yourself.
What you should do
- Keep your wallet and account details up to date, so your share reaches you.
- Keep your KYC current. Payouts follow the same eligibility rules as rent.
- Watch for updates from SecondaryDAO about the event, each payout round, and expected timing.
Questions
If you hold tokens in an affected property and have questions about your share, the timing of a round, or a specific payment, contact us through the chat on this site and a team member will help.