25 October 2018 - Events
The Following Article Appeared in the July Issue of Whitewall Magazine
10 TIPS FOR THE ART-SMART
Whitewall's Art Law Expert, Judith Bresler, Esq., gives us her 10 Tips for young collectors.
If you're a young collector, educate your eye: visit art fairs, galleries, auctions and speak to art professionals. Buy what you love. If the art happens to appreciate in value, great. If not, you can at least derive pleasure from your collection. Buy from someone reputable such as, an art dealer – an art professional who buys and sells art for a living. Be sure, however, not to lock yourself in with any one dealer – either for purchases or for art advice. After all, any dealer has an inherent conflict: since a dealer makes money only by selling art, the dealer has a vested interest in making a sale – not necessarily in educating you out of a sale.
Whenever you buy a work of art from a dealer, make sure that the dealer gives you a bill of sale or an invoice – and in any event, get the dealer to sign that piece of paper. In that way, the dealer will stand behind certain warranties being made about the piece of art you are buying. Which brings us to the 10 tips known by my clients and other art-smart buyers:
*1. Good Title: *In the absence of a proper disclaimer, any art purchase that you make from a dealer comes with a warranty of good title to the art. This means that (i) you are getting good title to the art; (ii) that the dealer has the right to transfer title; and (iii) that the art is being delivered to you free of any liens, claims or encumbrances of which you are not aware.
*2. Authenticity: *In the absence of a proper disclaimer, if a dealer describes a work of art in an invoice, bill of sale, brochure or other literature as being created by a particular artist, or being created during a specific period of time, or by a specific school, then that description gives rise to an express warranty on the part of that dealer.
*3. Provenance: *In the absence of a proper disclaimer, if a dealer includes information in an invoice, bill of sale, brochure or other literature about a work of art's ownership history, that is, for example, that the work of art was once in the collection of, say, Jacqueline Kennedy, then that statement gives rise to an express warranty on the part of the dealer.
*4. Condition: *Unless the art you are buying comes directly from the artist (through the dealer), you should require from the dealer a professional condition report on the artwork prior to completing payment of your purchase.
*5. Sales Tax: *As the buyer of art, you are responsible for paying any sales tax (or use tax) due on the art. If, for example, you purchase a work of art in New York State and take physical possession of it in New York State, you are responsible for paying the applicable New York State sales tax, which the dealer will collect from you. If, as another example, you are a resident of Connecticut and you buy a work of art in New York State and have it shipped by common carrier to your home in Connecticut, you are not liable for New York State sales tax – but you will be obligated to pay a Connecticut use tax (since Connecticut is among the vast majority of states that impose a sales tax on sales transactions).
*6. Packing and Shipping: *If you are planning to have the art you purchase shipped to a particular destination, make sure that the dealer arranges to have the art packed and shipped by experienced art handlers.
*7. Art Loss Register: *Unless you are buying a work of art directly from the artist (through a dealer), you might want to consider requiring the dealer to secure an Art Loss Register report to ensure that the art you are buying has not been reported stolen or missing. This report should be part of the business-like records you keep with respect to your collection (see point #10 below).
*8. Copyright: *Understand that when you purchase a work of art, embodied in that work is a bundle of intangible rights of copyright that ordinarily remain vested in the artist. You do not acquire these rights with your purchase of the physical piece of art. These rights include (i) the right to reproduce or make copies of the work; (ii) the right to distribute the copies of the work; (iii) the right to make derivative works based on the piece of art that you have purchase; and (iv) the right to publicly display your work by remote projection. So, if you are thinking that the piece of art that you bought would make a great holiday card to reproduce and distribute to everyone in your database as a way of keeping in touch…don't.
*9. Puffing: *Not every statement made by a dealer about a work of art amounts to an express warranty. If a dealer makes (oral or written) statements about either the value or aesthetics of a work of art you are buying, the courts will view this as mere puffing – and nothing more.
*10. Businesslike Records: *It is important to keep businesslike records with respect to each piece of artwork in your collection. That is, each work of art you acquire should have at least the following documentation: (i) a complete description of the work, including the artist, its title, the date it was created, its medium (or media), its size or dimensions and, if it is a limited edition, the size of the edition and the work's particular edition number; (ii) its ownership history; (iii) its exhibition history, if any; (iv) a listing of any literature describing or depicting the work; (v) an Art Loss Register report, if applicable; (vi) the name of the owner of the work (if a husband and wife each participate in collecting activities, the owner of each piece should be specified – and any insurance policies should be consistent with these ownership records); (vii) the date of purchase; and (viii) the cost of each purchase. There may well be tax benefits to the maintenance of such records such as, for example, establishing that a particular work is a long-term-capital-gain-type asset, in the event you subsequently wish to make a charitable donation of the work and would like to maximize your income tax deduction.