Art Collecting and Post Sale Changes in Attribution
Art buyers should not take the authenticity, title and provenance of an artwork for granted, even from a reputable dealer and even for post WWII work. Doubts as to authenticity substantially devalue art. As risk exists that expert opinion on attributions of visual art can change, art buyers should consider contractually protecting against this risk. Two years after sale of an artwork, The Dedalus Foundation, a New York private foundation dedicated to preserving the artistic legacy of Robert Motherwell (1915-1991), retracted an alleged pre-sale authentication. (Killala Fine Art Limited v. Weissman et al (S.D.N.Y.), Dkt. # 1:11-cv-00702-RJS, Feb. 1, 2011). Opinion change by relevant foundations is just one example of attribution change.
When expert opinion and consensus about authenticity changes after the sale of artwork, claims for breach of warranty of authenticity or for a mutual mistake of fact generally are not likely to succeed absent other facts, as the expert consensus before and at the time of sale will provide a reasonable basis in fact for authenticity representations at the time the representations were made.
Accordingly, in addition to a warranty of authenticity, an art buyer may want to negotiate a specific right to rescind in the event of an authenticity dispute. Relative bargaining position may not enable an art buyer to negotiate a broad or discretionary rescission clause in the event that authenticity concerns arise. However, an authenticity dispute within a reasonable period of time following sale could be put to the determination of experts selected by the buyer and seller or by a third party mediator. A reasonable period for such rescission, three years, may have protected the buyer in The Dedalus Foundation case while still allowing for finality of sale and protecting the seller against unlimited, unending risk of rescission. A buyer may have to pay more for this right.
Before making a purchase, it is prudent to trace ownership history and obtain supporting documentation, to review the exhibition and sales history, to check with the living artist or estate of the artist and to consult with appropriate experts and conservators. In addition, buyers should check the Art Loss Register to see if the work has been reported stolen and may wish to check UCC filings to determine if others claim a security interest in the work (it may have been pledged as collateral for a loan) and obtain representations that the work has not been pledged as a gift to a museum, among other potential pitfalls. Buyers should also consider whether their investment warrants purchasing art title insurance to cover legal costs in case of a title dispute and compensate for the agreed value of art if an ownership dispute is lost.
Related Attorney: Deirdre A. Fox
