Paul Klein writing on the Huffington Post warns collectors that there’s serious title risk embedded in the art market. Though he doesnt’ overtly advocate title insurance, he makes a number of points that would lead collectors in that direction:
One of the most overlooked financial complications of collecting, or even buying art, is whether or not we actually own the piece we’ve acquired. Tainted provenance — or even worse — is a real problem in the art world.
Part of the art world’s appeal is attributable to the free spirited, unregulated, highly-volatile megabucks that whirl within it and the buyers and sellers who love the art — and the action. […] Just because you paid for it does not mean you own it. Collectors who don’t proceed with due diligence can put their art at risk, especially if they sell the artwork to someone else.
Of the 300,000 or so stolen, missing or looted artworks listed in the Art Loss Register, an international database, more than 15% were created after 1945 – that’s 45,000 works of art, created since WWII that are out there in the world, that if acquired by one of us would make our life miserable.
In the decades I was an art dealer there was more than one occasion where a client made a layaway purchase, made the payments and never ever picked up the artwork, and as far as I knew flat out disappeared. Who owns that art? (I’m still storing some six years after closing.) Or what about important artists who consign work to a gallery and then forget about it? (Do you really think all artists have fastidious records?) The question is: Who owns this treasure? What if a dealer sells you a drawing by a major living artist who was never paid, who died, and over time the $10,000 purchase becomes worth a quarter of a million and the artist’s heir, now in college, decides to track all of Mom or Dad’s sales, and your piece is undocumented? (I see some variation of this almost weekly.) What if an heir does their homework and decides to track down the missing art and knocks on your door? Of course you are innocent(?), but what are you going to do, and what is the impact on you? Or what if the art you acquire was not a victim of shoddy record-keeping, but was actually stolen? Add the wrinkle that the reputable gallery you bought it from didn’t even know. What does this mean to you?
Artwork: You Bought It. You (Don’t) Own It! (Huffington Post)
