A good time to buy art
2019-05-13 | By Roos Hoek
It is a great time to buy art, especially with lavish art fairs approaching such as BRAFA Art Fair and TEFAF Maastricht.
Buying in today’s art market could be a good investment as several reports have confirmed positive health indicators in the art market in 2017 and 2018. If buying art is on your wish list for 2019, it is important to be aware of some of the risks that buyers face.
Using information received from collectors, art and finance operators, the Art & Finance Report of Deloitte and ArtTactic identified three main threats affecting the reputation and operation of the art market:
- Price manipulation
- Lack of transparency
Reduce your risk
The opacity of the art market requires greater responsibility by the buyer to reduce reputational and financial risks. Buyers are therefore recommended to conduct due diligence to check the seller, the artwork and the transaction itself. These checks include, but are not limited to:
- Identifying the legal owner(s) and all other persons who have a legal interest in the artwork and, in case of an intermediary, making sure that the seller has the authority to act on behalf of the legal owner(s);
- Establishing the provenance of the artwork. The lack of credible provenance could indicate an artwork is fake, forged, looted or illegally exported. In this case, the artwork should be checked against databases of lost and stolen art, such as INTERPOL’s ‘database of stolen works of art’ and the ‘Art Loss Register’.
The ‘Art Transaction Due Diligence Toolkit’ developed by Responsible Art Market (RAM) provides a useful tool for conducting due diligence and recognising red flag situations.
New technologies may force the art market to become more transparent and therefore better protect its stakeholders. Blockchain technology has the potential to overcome some of the biggest shortcomings of the art market. Blockchains can contain information such as sales records and provenance as digital certificates that link to works of art. This information is extremely difficult to manipulate, making fraud less likely. As a result, issues such as authenticity, legal ownership, credible provenance, and import and export could be placed on a more secure footing. On 13 November 2018, Christie’s New York was the first auction house to record sales results on a blockchain.
Get expert advice
GMW lawyers provides specialised art law services, for due diligence and provenance, import and export regulations, art litigation and art recovery. Our art law specialists can carry out investigations to identify any suspicious circumstances that surround acquisition, with special attention given to ascertain if the original or consequent owner was a victim of loss or theft. Learn more and contact us via gmw.nl/en
Roos Hoek is a specialist in art law at GMW lawyers. She is passionate about the importance of due diligence and has a special interest in the restitution of looted art.
070 217 19 65