Art Law

The Huffington Post ran an interesting article on art law. Rather basic but it does contain some interesting concepts on authenticity, transfer of title as well as some thoughts on how to consign art.

Overall a good article which helps fill an appraiser's knowledge base beyond valuation.  There is so much to know as we advise clients on items beyond pure valuation,

The Huffinton Post reports

There is no "lemon law" in the art world, no requirement for dealers to take back artworks that don't perform -- that is, gain in value over time -- or that result in people laughing at your for having poor taste. Pay your money and take your chances.

Still, there are consumer protection statutes that offer a measure of protection for those buying from, or selling through, art galleries and auction houses.

For instance, the warranty of authenticity: An object has to be what the dealer says it is. Fakes and forgeries, as well as items that are misattributed, such as a "Titian" painting that actually was created by one of his students, must be taken back by the dealer, if the sale were based on the items being authentic, for the money paid for them.

Another issue involves the proper transfer of title: A dealer must either own the artwork or be empowered by the owner to sell it. That seems obvious, but the art market has a wide range of stolen and looted objects in circulation. The buyer's recourse is to seek reimbursement from the person from whom he or she purchased the stolen items directly or through the courts.

Fourteen states around the country -- Arkansas, California, Georgia, Hawaii, Illinois, Iowa, Maryland, Michigan, Minnesota, North Carolina, New York, Oregon, South Carolina and Wisconsin -- have print disclosure laws that require dealers to provide a certificate of authenticity, identifying the print medium and the number of copies in a limited edition. New York State's law was amended in 1991 to include cast sculpture priced over $1,500. If any of the information on the certificate of authenticity is found to be erroneous, under California law, the seller is liable for three times the purchase price.

A federal statute, the Indian Arts and Crafts Act of 1990, looks to protect buyers of Native American objects by requiring that the artists be certified by their tribes in order to prove that they are "authentic Indians." Sellers of these objects face a fine up to $1 million for violations of the law, and uncertified artists may be penalized up to $250,000 and face a five-year jail term.

Beyond this point, laws tend not to define generally accepted conduct, and agreements must be negotiated between collectors and dealers. Will the dealer buy back an artwork? May prospective buyers take an object home with them to see if they like it? Do you accept layaway?

Also to be negotiated, when one is consigning an artwork to a dealer or gallery, is the percentage of the sales commission, who pays the costs of advertising and marketing, whether or not the dealer will insure the piece for its full market value while in his or her possession and pay all restoration costs in case of damage.

Under New York State's Arts and Cultural Affairs law (and similar laws of 31 other states around the country), artwork consigned by artists or their heirs is deemed to be held in trust, beyond the reach of the dealer's creditors, and they may retrieve their work (or proceeds from sales) rather than seeing it used to pay off a gallery owner's debts. Consignors to an art gallery who are not the artist or the heir of an artist may gain that priority standing if they have filed a UCC-1 form in person or online through the Department of State of the particular state in which the gallery is located at the time in which the object was consigned. The cost of filing the form is usually under $50. There is no need to fill out a separate form for each artwork, as multiple pieces may be identified on a single form.

Source: Huffington Post