Kate Taylor went to the VIP panel, Hidden Risks in Art Transactions, this morning at the Armory Show. Here’s her report:

Art lawyers Ralph Lerner and Judith Bresler, both of Withers Bergman, offered an excellent introduction to the risks collectors should be aware of when purchasing art. The four-year statute of limitations on warranties means you should not wait until you want to sell a piece before getting it authenticated. Also, be careful who you entrust your art to. If you leave a painting with a dealer to be framed, and the dealer sells it, you generally can’t get your painting back, as the dealer is empowered to sell to what is known in the legal world as “a buyer in the ordinary course”: that is, someone who didn’t have any reason to know that, in buying the painting, he or she was trampling on your rights.

Lerner, whose clients have included the Ileanna Sonnabend estate, a portion of which was sold for $600 million last Spring, just before the market crash, said that he always recommends that clients get a written contract when they purchase a work, which spells out all the warranties. Often the contract will include a statement by the dealer that he or she has never heard anyone question the work’s authenticity. That way, if you learn later that the dealer WAS aware of rumors that the work was fake, you have a good case.