Those who surround themselves with meaningful works of art and other small pleasures may reap the benefits of those choices for years to come. Their loved ones may eventually profit from those decision as the works appreciate in value over time.
Some fine art investors may be disappointed with the purchase. That disappointment may lead to a lawsuit against a broker, gallery or creative professional. The following are the most common reasons people pursue art-related civil claims after purchasing a work.
Concerns about authenticity
Art fraud has been an issue for as long as art has commanded a premium price on the open market. There have always been expert painters and sculptors who create incredibly detailed duplications of another artist’s work. That individual, a brokerage or a gallery might then try to sell the piece made by a knockoff artist as the real thing. Those who uncover signs of fraud may pursue litigation against the party that sold them the work.
Issues with ownership records
Stolen works of art provide a fertile field for litigation. The original owner of the work could potentially take action against the new owner. Someone who purchased a work of art that was stolen might take legal action against the gallery, broker or auction house that facilitated the transaction.
Non-payment of a consignment fee
In connection with works consigned to a gallery, the gallery becomes the agent of the consignor. The gallery owes a fiduciary duty to the consignor. That means the gallery has a duty to act in the best interest of the consignor. The proceeds of the sale are held in trust for the consignor who is the first to be paid from the proceeds. The consignee is duty bound to make a record of all transactions involving the sale of consigned goods.
Taking legal action may be the only way to recover lost funds from an art investment that turned out to be sub-optimal and to generate consequences for those engaged in fraud or other forms of misconduct within the art world.