Title Insurance and Authenticity Litigation

Aris, the industry leader in art title insurance recently sent out an email blast on the growing need for art title insurance and references a blog post from the law firm of Herrick Feinstein LLP and a recent article in the Art Newspaper on how litigation is effecting scholars and their opinions on authentication.

Although still over 6 moths away, the upcoming International Society of Appraisers annual conference in Kansas City includes Judith Pearson, President and Co-Founder, ARIS Companies. If this topic is of interest to you as an appraiser, art scholar or authenticator, you might consider attending the conference.  In addition to Judith Pearson, some additional speakers include Michael Findlay, Director Acquavella Galleries and author of the Value of Art, Scott Miles, Director, Corporate Strategy at Artfact, LLC, Dr. Bruce Robertson, Acting Director of UC Santa Barbara's University Art Museum and Professor of History of Art and Architecture at UCSB, and attorney Peter Gaido, Esq, Gaido & Fintzen on expert witness testimony.  The conference is scheduled for April 25 - 28, 2014.  Click HERE for more info on the ISA conference.

Aris reports

Art Industry News

October 16, 2013 - The case for title insurance

ART & ADVOCACY - A transactional real estate and art attorney opines that given the indisputable proliferation of art market title risks (from theft to other title problems such as gifts or loans, hidden encumbrances and family disputes), which can have a long tail and are challenging to identify even by experts, as well as high valuations for art, title insurance should be a standard convention in all art sales above a certain price point.  Access Full Text
October 11, 2013 - AbEx fakes scandal silences the experts


THE ART NEWSPAPER - The criminal and civil authenticity-related Knoedler Gallery, LLC, litigation is having a chilling effect on scholars, who are increasingly reluctant to give their opinions about artworks for fear of being dragged into expensive, reputation-damaging litigation. Collectors and their advisors are now seeking to take more responsibility in verifying art purchases of Modern and even contemporary art.
[ARIS Commentary: The long-term fallout from the Knoedler litigation (which highlights the increasing frequency of authenticity-related claims, corollary decreasing willingness of experts to give public opinions and as a result increasing inability of the market to confirm authenticity) is likely to transform the art trade, which has no other financially viable option but to disclaim expressly all warranties of authenticity and to replace these contractual and implied warranties with a negligence-based duty under which dealers can maintain that they exercised reasonable care in investigating authenticity. ARIS predicts that dealers and galleries will seek in effect to create shared liability with buyers and to remove any suggestion that non-merchant buyers have no duty to inquire independently about their art purchases. This shifting of the duty to investigate to both the sell-side and the buy-side puts the art market in a still greater quandary and counterbalances the first Knoedler decision (De Sole et al. v. Knoedler Gallery, LLC et al. and Howard v. Freedman et al., motion to dismiss ruling by Judge Paul Gardephe, September 30, 2013). Because authenticity has a provenance component and provenance constitutes a subset of legal title, buyers and sellers who incorporate title insurance into their transaction which addresses the core title risk and puts an additional lens on authenticity can readily demonstrate to downstream-buyer litigants and the courts that they exercised a greater level of care in the transaction than might otherwise have been acceptable under past legacy standards.]   Access Full Text