Risk Disclosure Statement

IMPORTANT: UNDERSTAND THE RISKS BEFORE INVESTING
Real estate investments, especially tokenised fractional interests, carry significant risks.
You should only invest capital you can afford to lose and can lock in for the medium to long term.
Please read this entire disclosure carefully.

1. Illiquidity Risk

Real estate tokens are illiquid assets. Unlike publicly traded securities, there is no guaranteed secondary market for these tokens.

You may not be able to:

  • Sell your tokens quickly or at all
  • Exit your investment at a favorable price
  • Access your capital when needed

Most offerings include lock-in periods where transfer is restricted.
Even after lock-in, secondary transfers depend on willing buyers and SPV approval.

2. Market & Property Value Risk

The value of the underlying real estate can fluctuate significantly due to:

  • Changes in local real estate market conditions
  • Economic slowdowns or recessions
  • Natural disasters or force majeure events
  • Changes in neighborhood desirability
  • Environmental or infrastructure issues
  • Interest rate changes affecting property valuations

3. Tenancy & Occupancy Risk (Commercial Properties)

For commercial and residential rental properties, income depends on:

  • Occupancy: Vacancy periods result in zero income
  • Tenant Quality: Defaults or early termination reduce income
  • Lease Terms: Market rent may be lower than projected
  • Maintenance Costs: Unexpected repairs can reduce yields

4. Regulatory & Legal Risk

The regulatory landscape for tokenised real estate and digital assets in India is evolving.

Risks include:

  • New regulations could restrict or prohibit certain structures
  • Tax treatment of tokens may change
  • Regulatory changes could force unwinding or restructuring
  • SEBI, RBI, or Income Tax authorities may issue directives affecting tokenised assets

5. SPV-Specific Risks

Your investment is only as strong as the SPV managing the asset.

Key risks include:

  • Management Risk: Poor decisions can impact performance
  • Debt Risk: SPVs may carry leverage, creating priority claims before investors
  • Insolvency Risk: Your claims may be subordinated if the SPV fails
  • Related Party Transactions: May occur on terms unfavorable to investors

6. Tax & Compliance Risk

Your tax obligations can include:

  • Tax on rental income or capital gains
  • GST implications
  • Stamp duty and registration requirements
  • Wealth tax (where applicable)

The tax treatment of tokenised assets is evolving.
Consult a qualified tax advisor for your specific situation.

7. Platform Risk

While PROP TOKENS implements security measures, platform-specific risks include:

  • Cyber attacks or data breaches
  • Technical failures or outages
  • Wallet or account access issues
  • Loss of authentication credentials

8. Currency & Inflation Risk

Consider the impact of:

  • Inflation eroding real returns
  • Real estate returns lagging inflation in weak markets
  • INR currency fluctuations affecting global investors

9. Lack of Diversification

Tokenised real estate investments are typically concentrated in a single asset.
This carries higher risk compared to a diversified portfolio.

10. No Insurance or Guarantee

Your investment is NOT protected by:

  • DICGC (Deposit Insurance and Credit Guarantee Corporation)
  • SEBI protection schemes
  • Government guarantees
  • PROP TOKENS indemnification

Before investing, you should:

  • Consult a qualified financial advisor or wealth manager
  • Review legal documentation with a real estate lawyer
  • Understand tax implications via a tax professional
  • Conduct independent due diligence on the SPV and asset
  • Assess your risk tolerance and investment timeline

Acknowledgment

By participating on PROP TOKENS, you acknowledge that:

  • You have read and understood this Risk Disclosure

  • You accept all risks outlined

  • You are not relying on PROP TOKENS for investment advice

  • You have independently evaluated the risks of the investment