PAPERWORK HELPS PROTECT YOUR TREASURES FROM LOSS
By Danielle Arnet ● Illustration by Michael Jantze
THERE IS ONE sure thing guaranteed to strike terror in the heart of a serious collector, and it is the idea that a beloved item may be lost, or even worse, swindled away. The mere possibility will send any collector into absolute shock.
No one wants to think that anything untoward or larcenous might happen to their precious and lovingly gathered collection or inheritance. Certainly, not after they hand it over in good faith to be sold.
Yet for the unwary and unprepared, deceit is a real possibility. One notable episode still unspooling as we write involves multiple lawsuits against a New York art dealer accused of pocketing proceeds of works entrusted to him by clients. The case involves pieces by Picasso, Canaletto, Magritte, Chagall, Gauguin and van Gogh. In some instances, this dealer was not even authorized to sell the works.
Assets amounting to more than $10 million have been frozen while courts in the United Kingdom and United States unravel charges leveled by individuals and family trusts. In at least one case, dealers who received works without clear title from the accused dealer have also been sued.
The accused dealer’s actions and the resultant flap are not unique, nor is the precipitating motive. Larceny often happens because a high-flying dealer/advisor gets into a financial bind, then uses available merchandise as a way of climbing from the hole.
Within the past decade, the long arm of the law has reached out to touch the former board president of a prestigious American museum, plus a museum curator who acted with a family member to allegedly pocket client monies. And there are more. Not all were crimes against individuals; some were against trusts and institutions.
All sorts of flimflams are possible after you release a valuable item to what you believe is a trusted gallery or dealer. Make sure you do your due diligence. In most cases, experts say, chicanery is easily preventable.
BEYOND A HANDSHAKE
“Many major art deals happen on a handshake and a promise, and that comes from a tradition in the art world,” says Mark Prendergast, Heritage Auctions’ director of trusts and estates. A handshake deal does not have legal documentation to support it and often does not serve the consignor well.
Pennsylvania-based expert Robert Wittman has seen the seamy side of art fraud. Formerly a special agent for the FBI who investigated art theft and fraud, he worked undercover throughout the world to recover stolen property. After 20 years with the bureau, Wittman became an art security consultant. “There are things any good collector should do, whether they are selling their goods or not,” says Wittman, author of the book Priceless: How I Went Undercover to Rescue the World’s Stolen Treasures.
Always collect paperwork, he advises. Intelligent collectors save receipts from purchases and make notes on provenance, condition and pertinent dates. And they keep them current. As years pass, be sure to note any new information. Also track market results or changes related to the piece.
Keep a dossier on every item. When the time comes to sell, you’ll have valuable facts at hand.
As Prendergast puts it, “You have to make informed decisions so that you can form expectations on selling when the time comes.”
When the day to let the item or collection go arrives, review those dossiers. Then examine every contract offered. Ask questions if you do not understand something. Solid contracts make for fewer issues throughout the sale process.
Going further, Prendergast advises to include wording on what-if contingencies, such as limiting time in a consignment agreement. As an example, insert language stating that the dealer may hold the property a specific time before selling. That ensures that your treasure cannot languish in a dusty corner for just the “right” sale. Selling through a major auction house defines the sale period and ensures the timeline for possible sale.
Contract language can include contingency for a slow payer or what happens if the item does not sell. If the seller will list the item again, language is needed on how long he or she can hold an item before trying again.
“Paperwork is the key,” Prendergast emphasizes. Without proper forethought, “Financial issues start snowballing.” Yes, prep can be tedious. But regrets last forever.
He summed it up this way: “If you’re selling real estate, would you simply hand it over to a real estate agent?” Anyone who has plowed through multi-page selling agreements for land or a house will get the point.