[intro]Just Because a Painting Is In Your Possession Doesn’t Make It Yours[/intro]
Eugene Rome is a business and art lawyer in Los Angeles whose recent art cases include the representation and resolution of an action initiated on behalf of an owner of a notable pop art painting against competing claimants as well as the successful resolution of a claim by a prominent Beverly Hills Gallery against its insurance carrier stemming from damage to a significant work by Pablo Picasso.
How often have you shown your art collection, proudly pointing out a prized Chagall or Warhol, asking: “So what do you think of my painting?” But, have you ever wondered, is this painting really mine? Sure, the Renoir inherited from the great grandfather is yours. And, of course, so is the Schiele acquired at a Sotheby’s sale. But, what about the Miró left with you by a friend as security for the sizable sum you lent him to pay for his daughter’s wedding fifteen years ago. There, the answer may be more complicated, requiring a methodical analysis of the legal principles establishing your rights in the work.
Sure, this friend borrowed the funds for six months. And, yes, he specifically said that you can hold onto the Miró as collateral which, in the event he does not pay you back in full (of course he assured you that would never happen), you can keep or sell. In fact, you have a signed note from him reflecting all of these terms. And, when he did not pay you back on time, you called him and stated that if the funds are not paid back within two weeks you would be keeping the Miró. He disagreed but did not pay you the money. So, you sent him a certified letter stating that the painting is now yours since he has failed to make payment. Fifteen years down the line the painting is no doubt yours … or is it?
There are a few approaches to examining the parties’ respective ownership rights in the painting. The first requires an examination of the process by which the collateral for the loan – the Miró painting – was foreclosed upon, the second inquires into whether the painting may have been acquired through adverse possession and the final query is whether the current holder can argue that the Miró was abandoned.
In typical consumer transactions involving personal property, such as a painting, the terms of the relationship are determined by a contract. When funds are advanced, the agreement typically includes a provision giving the lender a security interest in the work. When the borrower defaults, the lender is entitled to foreclose on or repossess the property, resell it, and then apply the proceeds of the sale toward the loan.Continue Reading