Buying Expensive Art? Better Have a Lawyer Handy for Contract Negotiation & Due Diligence
Buying an expensive piece of art from a well-known dealer or auction house might not seem like a transaction fraught with potential perils.
But it is, experts tell the New York Times (reg. req.).
The work might be stolen or forged. Or it might be subject to an Internal Revenue Service lien or claims by bankruptcy creditors, among other potential pitfalls.
Title insurance and a negotiated sales contract providing for remedies if the purchase proves to have been improperly conveyed can help protect a buyer. However, there may still be loopholes, so it’s important for a buyer to perform due diligence on the piece beforehand, the article says.
Clients who wouldn’t consider taking such risks when purchasing other types of assets often fail to investigate adequately to determine the fair-market value of a desired piece, even though sale catalogs are printed far in advance, according to partner Joel Lever of Kurzman Eisenberg Corbin & Lever.
And, even when they do perform proper due diligence, the excitement of an auction can overcome their better judgment.
“I have many clients who lose all discipline, like they were at the craps table,” he tells the newspaper.
