Potential Pitfalls of Art Collecting

(…and the avoidance thereof)


Art collecting is not just fun, it’s spiritually satisfying as well. For that reason, mistakes and tragedies are not just expensive but also heartbreaking. So as much as it is possible to do so, they should be avoided. We can’t know what’s going to happen but we can assess what generally happens and mitigate those threats.


One of the primary perils of art collecting, once you’ve stepped up to the bigger leagues, is buying a fake. The exhilaration of acquisition, the rush you get when your art finally arrives at its new home -your home – all of the care and keeping and love, are inversely proportional to the feelings of angst that must come with finding out that your beloved is not what you thought it was. Not getting financial relief after such a discovery could only make it worse. But that is exactly what’s likely to happen.

You have only four years from the time of purchase to pursue a legal claim for breach of warranty. That refers to an instance where the buyer didn’t know and nor did the seller or the sellers representative, even if they should have know, that the work in question is not what it was represented to be. Often that discovery won’t even be made for many more years than that because for private collectors, appraisals generally happen to facilitate a sale or a gift or some other sort of transfer. Not every day stuff. If fraud is the charge, versus ignorance, you might fare better. With a fraud charge you have six years from the time of purchase or two years from the discovery of the fakery to make your charge and pursue your claim.

All of that agony can be avoided by taking the time, and expense, to authenticate before making an acquisition. There are three primary assessments for authentication:

Connoisseurship – Some extremely well versed professional who knows from many years of experience what exactly it’s supposed to look like and what doesn’t look quite right.


Provenance – Where has it been? How long was it there? Where'd it go next? Ideally, there should be an unbroken, verifiable time line from the artist's studio to the wall in the corridor out your guest bathroom.


Scientific Analysis – Checking the materials and medium for time dating and place confirmation, ie; “There was no spray paint in the 1400s, so this isn't likely an Old Dutch Master original.” Also, x-rays might be used to see evidence of restoration, overpainting, et cetera.


Authentication is serious business to be undertaken by serious people. It’s not inexpensive either. If you’re buying great art though, you want to get what you’re paying for.


You can also use a contract when buying, as opposed to just an invoice. A contract allows the buyer to write warrants, representations and indemnifications protections into the agreement. Writing those protections shifts the risk and liability to the seller or to the broker. There is a lot of space between winning in a breech of contract suit and actually getting paid, so reliable authentication is still your best bet.



Over paying is another mistake that you want to avoid. There is little chance of getting any relief if you find you’ve been significantly overcharged for a piece of art. Even billionaires who have sued art dealers for overcharging have found courts to be unsympathetic. The thinking is that you could have known, so you should have known, especially if you were about to part with a big chunk of money. In the art world, trust is lazy and foolish. For insurance, sale, divorce or other transfer purposes, they are absolutely required. For making major purchases, getting an appraisal is a prudent course of action. Even if the price of the piece you are considering doesn’t warrant paying an appraiser, you should still do your own nominal due diligence. It isn’t hard to find out what an artists work has sold for recently. Remember also that the transaction is voluntary. It's not like paying taxes. The price is negotiable and you can walk away if you don't feel you're getting a fair value exchange.


If you do choose to use an appraiser, be sure select one who is properly accredited by one of the two reputable accrediting organizations – American Appraisers Association and American Society of Appraisers. An accredited appraiser will tell you if the art you need assessed is outside of their area of expertise. That is important. Appraisers should specialize. Also, they will adhere to the Uniformed Standards set forth by the Associations. Their doing so means you shouldn’t get wildly divergent appraisals from different appraisers for the same work. There is no legal requirement for being an art appraiser. The only thing keeping me from calling myself an appraiser right now, is a VistaPrint order. So choosing someone from one of the accrediting associations is critical.

Another common peril is loss due to accident or disaster. While no one has no insurance, many collectors have wrong or insufficient insurance. You’ll want to get that right. After you’ve sorted that out, you will want to make sure that if something bad does happen your insurer has the information necessary to make a quick and favorable settlement.


Proper and thorough documentation will prevent a bad situation from getting much worse. If your art is covered by your general homeowners policy, you still want the insurance company to know what you have and what its worth. Send them pictures, detailed descriptions, condition reports, appraisals, authentication reports, before you have a claim to file. Insurance companies investigate claims. Give them what they need to get it done fast. Keep a thorough file on your collection with all of that information in it. The ArtWorks program is great for that. If you insist on keeping a composition book file, be sure its not kept where your art is kept. They may all be lost together in the same fire.


None of this sounds fun or sexy, but if the good part is to stay good you’ll want to avoid messes and be sure that if there is a mess it can be tidied up quickly.


W Skeet Jiggetts


#artcollecting #authenticart #buyingart #fakeart #fake #appraisals #pitfalls



HOW TO COUNT MONEY

Financial Independence is the Ability to Live

 

SPONSORED BY FAMILY FINANCIAL MANAGEMENT PRACTICE

"A little sleep, a little slumbering, a little folding of the hands to rest, and your poverty will come like a bandit, and your want like an armed man." - Proverbs 24: 33, 34 NWT

  • Facebook
  • Linkedin
  • Pinterest

SOCIAL

  • Facebook
  • LinkedIn
  • Pinterest

CONTACT

PHONE:

973-239-7800

SEND AN EMAIL

HOT LINKS

SPONSORS AND ASSOCIATES

artwork archive orange.jpg

Keep in mind that we may receive commissions when you click our links and make purchases. However, this does not impact our reviews and comparisons. 

© 2018-2019 Family Financial Management Practice