With title claims an increasingly troublesome issue for those transacting in fine art, it is important that proper due diligence title research is carried out in each transaction. That is the view of Tony Baumgartner, a partner with law firm Clyde & Co.
Baumgartner specialises in the fine art and cultural property worlds, with a client base ranging from insurers underwriting risks in the London market and overseas to auction houses, galleries, dealers and collectors, consignees and carriers.
“Insurers tell me that demand for their products in the private sector remains constant, especially for cover for loss and damage to works, with demand for defective title cover amongst dealers continuing to grow over recent years,” he said.
He emphasised that to protect against disputes and disappointment, due diligence is essential in every fine art purchase.
“Some of the forgeries flooding the market are very good indeed”
“Some of the forgeries flooding the market are very good indeed, and even specialist dealers have been taken in by the quality and sophistication of some of these works and their manufactured provenance.
“For buyers the general principle in purchasing fine art under English law remains ‘buyer beware’, and both buyers and sellers really do need to ensure they know the terms and conditions applying to their transaction so they can properly assess where the risks lie before the transaction closes – and ensure they are appropriately covered in case something goes wrong.”
When seeking art insurance, there are many factors which need to be considered, he added.
“Each work can present its own unique perils, as can each transaction. Properly identifying those factors is key to ensuring appropriate cover is purchased. The first stop for any commercial or high net worth insured seeking cover for fine art risks is a specialist insurance broker who can assess the type of cover required for the risks which the works are exposed to.
“Disputes can sometimes arise out of the type of cover or the level of cover which an insured has obtained, and so advice from a specialist broker before cover is essential to alleviate such problems in so far as possible.”
Asked for his views on the current state of the art market, Baumgartner painted a varied picture:
“Some sectors of the art market are buoyant with auction prices remaining strong in certain regions, while others are showing signs of distress. Anecdotal evidence suggests that pricing for quality works remains high for both auction and private treaty sales.
“Many public collections are facing significant funding constraints from government, though as yet this does not appear to be affecting demand for commercial insurance for loans and exhibitions.”