The New York Times warns that loaning a dealer your art work could put you in a vulnerable position:
“Art is valuable and portable and it’s very hard to protect yourself,” said Norman Newman, who heads the fine arts and special risks department at HUB International, an insurance broker.
He said many collectors were eager to have their art displayed in museums and at reputable galleries, because shows help increase the piece’s value. In their exuberance, collectors often neglect to have a properly worded contract drawn up. Such a contract would detail how long the gallery would show the art, the minimum price for it and where or if it could be moved.
These all seem to be simple requests, but Mary Sheridan, the assistant fine arts manager for Chubb, the insurer, said families who had collected art for decades were used to doing business with a handshake. “Maybe nothing untoward has ever happened in those three decades,” she said. “But dealers can do whatever they want and not tell clients about it.”
While a collector retains legal title to his art when he lends it to a gallery, the dealer can simply sell it. “Dealers are merchants in the kind of property you’re loaning them,” Ms. Laird said. “Once you’ve entrusted it to them, then they can sell it, and if they sell it in the ordinary course of business, that buyer gets good title to that work even if the dealer never pays you.”
Protect Your Art with More Than A Handshake (New York Times)