Sales and Management

Initial Sales

After signing a sales memorandum and placing a deposit on the property, Tangible Custody lists each property for sale on Tangible. The sale is open to all users for two weeks, or until all fractions are sold out. During this sale, each user who purchases a fraction of the property will receive an “In Escrow” TNFT, which cannot be transferred, sold, or traded, but represents their share of ownership of the SPV, and identical share of the In Escrow property. Once the initial sale ends, the TNFT will be unlocked, and rent distributions will start within seven business days.

Should the property-backed TNFT almost sell out, but not to 100%, the sale may be extended by a limited number of days. Should the property-backed TNFT not sell out by the sale end date, the sale will be canceled, and all initial purchasers will be refunded 100% of their investment, including all fees, within five business days.

Tokenization

Upon listing in the marketplace, all new real estate TNFTs will include a 5% tokenization fee added on top of the house price. This fee will be charged to all buyers and is used to cover legal fees, other costs associated with sourcing and closing properties and miscellaneous protocol overhead.

Rent Collection and Rental Yield

Tangible Custody collects rent from the tenants, and pays the rent to the Tangible DAO, which places the rent in smart contracts that allow all token holders to collect. Rent distributions start within two business days of the initial property sale being completed.

Rental yield will be disbursed daily to all TNFT owners, minus the below management fee collected by Tangible Custody. Fractionalized TNFT’s rental yield will be split proportionally between fraction owners. Tangible Custody endeavors to lease all TNFT-backing properties, whenever possible.

At initial purchase of a Real Estate TNFT, 2% of the purchase is moved into a vacancy reserve, to support continued rental disbursement during periods without an active lease. Should the reserve capital fall below 2% of the property valuation, a recurring 20% of rental yield will be held back until the vacancy reserve is replenished. Should the reserve become completely drained, rental yield will be paused until the property is again leased. Should a property fail to rent, Tangible Custody may decrease the rent to find a tenant. (Conversely, should market demand grow, Tangible Custody may increase the rent.) Should an owner take possession of and redeem the TNFT, all capital in the vacancy reserve would revert to the owner with the property.

Management Fee

Tangible Custody manages the properties for an annual fee of 2% of the property value. This includes ensuring the property is leased as consistently as possible, informing owners of any repairs required (when relevant), overseeing any repairs required. Tangible Custody will also manage redemption requests, transferring ownership to a named person or new legal entity, for an additional fee.

Maintenance and Repairs

At initial purchase of a Real Estate TNFT, 5% of the purchase is moved into a maintenance reserve. This reserve will be accessed should any repairs or maintenance, including possible major costs both planned and unanticipated, become necessary. (Repairs and maintenance covered by property insurance will not affect the maintenance reserve.) Should the reserve capital fall below 5% of the property valuation, a recurring 20% of rental yield will be held back until the maintenance reserve is replenished. Should the reserve become completely drained, 100% of rental yield will be put towards replenishing the reserve. Invoices and quotes for repairs above $100 will be uploaded to the real estate owner’s portal.

Should an owner take possession of and redeem the TNFT, all capital in the maintenance reserve would revert to the owner with the property.

Insurance

All TNFT properties are fully insured. Insurance costs will reduce monthly yield, although the advertised TNFT yields are adjusted to reflect this cost.

Taxes

It is each TNFT-owner’s responsibility to report their yield income to their domestic taxation body or country of residence.