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Should Collectors Worry about Art Theft? The Importance of Provenance and Good Title

Disputed antiquities and art stolen in the first part of the 20th century have been in the news. But as a collector of modern or contemporary art, should you be concerned? This article addresses common misconceptions about art theft and highlights some of the steps you can take to protect yourself and your investment.

By: Denise M. Alter, Esq.

You’ve probably read recent news reports about stolen art. Maria Altmann finally recovered her family’s Gustav Klimt paintings stolen during the holocaust, which spent the last half-century in Austria. Marion True, a former antiquities curator at the J. Paul Getty Museum in Los Angeles, is being prosecuted by Italy in Rome for her alleged role in the illicit antiquities trade. And Marilynn Alsdorf, a major art collector and donor, found herself embroiled in litigation in three courts in two different states over Picasso’s Femme en Blanc, a painting in her collection that a U.C. Berkeley student claimed had been looted from his Jewish grandmother during World War II.

But as a collector of modern or contemporary art, you may have dismissed these cases as irrelevant to you. After all, Alex Katz didn’t paint Morning, a work in your collection, until 1999—fifty years after the holocaust. And the million-dollar Calder mobile, Three White Dots and One Yellow, you purchased this spring in auction at Sotheby’s, is a modern work that Calder probably created right here in the United States. Besides, you acquired these works from a reputable dealer and a recognized auction house. Can there be any cause for concern?

Although your purchases are likely sound, you can learn valuable lessons from art theft cases to avoid buying stolen art and to protect your own collection from the taint of stolen or inauthentic art. While some risks associated with collecting pre-WWII art and antiquities are unique, others are common to collecting art from any period.

Common Misconceptions about Art Theft

Collectors who fail to conduct provenance due diligence to ensure good title before purchasing works of art often do so because of the following misconceptions:

The lesson for all collectors from cases of stolen art is the importance of conducting provenance and due diligence for every work of art they buy—before they buy it; not years later after it has appreciated in value and someone initiates costly legal action to lay claim to the work. The next section outlines seven of the key steps for conducting due diligence to ensure sound provenance and good title of your art.

How to Ensure Sound Provenance and Good Title

Although the extent of due diligence that can and should be conducted may vary with the type and value of a work of art being purchased, thorough due diligence makes real dollars and sense today. In fact, an object’s value is based, in part, on whether sound provenance documentation is available. Should an ownership dispute arise in a case, courts may well evaluate the reasonableness of the buyer’s due diligence to determine if he or she is a good-faith purchaser and entitled to the art.

Here are a few of the things collectors can do to manage the risk:

  1. Have an expert study the work and authenticate it. Document the work’s medium, materials, support, framing, dimensions, and any encryptions, signatures, dates, customs stamps, exhibition stickers, dealers’ marks, or transport markings, as well as the work’s condition and any apparent conservation. Photograph both sides of the object. Ask to have the work taken out of its frame to determine whether it has been cut down from its original size, and black light the surface to view any hidden conservation or alterations that may affect the work’s value.
  2. Take copies of any catalogs, exhibition guides, artist monographs, press or magazine articles, and institutional files you can find about the artist and the work of art. If there is a catalogue raisonée for the artist, verify the object is referenced in it, and collect as much provenance information as may be listed. If there is a foundation for an artist, like the Warhol Foundation, contact the foundation regarding the work. Look to outside libraries and archives to document the history of the work, and to determine all prior owners and dealers. If you can’t close all the gaps, consider using a professional provenance researcher to document the ownership trail.
  3. Know the dealer’s business reputation and check out all documentation for the object. Require a copy of any invoices, bills of sales, loan histories, purchase agreements, insurance, transport receipts, brochures, and exhibition guides that may document ownership. Ask for the seller’s provenance and title research, if any. Ask for proof that the dealer is authorized to sell the work. If anything suggests the dealer’s documentation is forged or fake, insist on better documentation or walk away from the deal.
  4. Study the market for the work and engage a qualified appraiser, one who is an active member of a leading professional appraisers’ society, to value the work. Look at sales information through websites for auction houses, or from online companies such as artnet.com or artprice.com, which track sales of works of art.
  5. Consult organizations that track stolen art such as the Art Loss Register, the State Department, and law enforcement agencies such as the FBI, Interpol, and the Los Angeles Police Department. Also look to information about stolen art from professional arts organizations such as the Art Dealers Association of America and from those museums that offer provenance research and archives such as the Getty Provenance Index [2].
  6. Have a lawyer negotiate and prepare or review any proposed sales agreement to ensure there are no limitations on marketable title, or on the rights being transferred. For objects originating outside the United States, a lawyer can verify that all necessary international import/export and customs permits are in order. Attorneys can also prepare complex exchange agreements for tax savings and advise you on sales and/or use tax to, saving them later interest payments and penalties to tax authorities.
  7. Purchase insurance including title insurance for the work of art. Negotiate insurance with a buy-back provision in case a collector is a victim of stolen art.

By investing the time and resources up front to ensure you really own your work of art, and all rights attendant to it, you will enjoy your beautiful work of art for the life of your investment.

Note: The information contained in this article is not legal advice and does not establish an attorney-client relationship. Readers should consult their own legal and professional advisers in connection with the purchase, sale, and collection of art.