Many collectors may assume that any works of art created after the Second World War are largely immune from provenance and title problems, but that would be a wrong assumption. The Art Loss Register, the most comprehensive international database of stolen, missing and looted art works, adds around 14,500 art works each year. Of the more than 250,000 items in their database over 15% were created after 1945. In addition to maintaining records, the Register actively searches the exhibits at all major art fairs and scrutinizes the inventories of upcoming auctions. Insurance companies and art dealers routinely subscribe to the Register to check for items that have been stolen. Discoveries can be surprising: in 2007 an $80,000 painting was recovered at the Palm Beach Fine Arts fair that had been stolen in 1995 from the Buffalo Club in New York State.

Even living artists may have a claim to improperly sold works; New York has gone further than any other state in protecting the rights of artists to recover works sold by dealers who did not properly compensate the artist. Relying on the advice of a trusted art advisor, a reputable dealer or buying through a respected auction house are important first steps but may not be enough to avoid a claim of defective title against art that has been innocently purchased.

Provenance, Title and the Private Collector
It should be axiomatic that no prudent collector would buy an expensive work of art without establishing credible and lawful title, yet in the hushed and clubby world of art dealing such persistent inquiry can sometimes seem rather impolite. However, a work of art made before 1946 will always have a question mark hovering over its provenance, and buyers of such pieces should be especially diligent before parting with their money. Happily, there are resources available to help private collectors with their investigations:

UCC Filings
Overall, sales of art are governed by the Uniform Commercial Code (UCC) which most states have enacted as their law. A UCC filing provides notice of a security interest (e.g. lien) that someone or an entity holds in a specific item. Not all stolen works of art have UCC filings and the filing search must be done state-by-state because there is not a national UCC database. UCC filings will identify most security interests but they are not a means of detecting historic theft.

Database Searches
The Art Loss Register (www.artloss.com) enables owners to register lost or stolen items and list possession of items in the pre-loss database. Potential buyers may search to see if an item has been entered as lost or stolen. Fees are generally $75 each and $760 for 25 searches. There are also additional services offered such as World
War II registrations and provenance research. Interpol (www.interpol.int) the world’s largest international police organization maintains a database of 34,000 stolen art works. There is no charge for searches but users must submit an application for approval to receive a password.

Art Title Advisors
Research is also offered by Art Title Advisors (www.arttitleadvisors.com), who for a fee will produce an Ownership Rights Protection Report that describes the results of their investigations into title. Art Title Advisors checks both public and private databases as well as an extensive network of dealers and museums. Their reports provide collectors with a documented record of due diligence structured to help defeat competing ownership claims. Fees for artwork under $250,000 are usually between $750 and $1,000. For art valued between $250,000 and $10 million the fees range from $2,500 to $3,500.

ARIS – Art Title Insurance
Another company, ARIS Corporation (www.aris-corporation.com), offers art title insurance, a form of title insurance similar to that used in real estate transactions. For a premium that can range from 1.75% to 7% of the item’s value, ARIS provides title insurance that typically covers loss due to defective title from past provenance risks and also “classic” title risks such as liens and security interests.
When Ownership is Challenged
For a collector who has acquired a work of art, having the right to ownership disputed can come as both an emotional and financial shock. Courts in the U.S. will generally “balance the equities,” meaning that the due diligence the collector made to avoid possession of stolen art will be measured against the steps the former owner made to recover the art. Nonetheless, the burden of discovery will usually weigh more heavily on the purchaser, who is assumed to have the sophistication and the resources to authenticate the history of a purchase. Chubb has responded with coverage which reimburses legal fees up to $100,000 incurred in a title dispute for scheduled works of art (except in New York). Unfortunately this benefit does not extend to the value of the work if the owner is required by the courts to forfeit the piece.
Jonathan Ziss, a partner at Margolis Edelstein and a founder of Art Title Advisors points out that there is in addition to the problem of defective title the ever-present concern with authenticity—a wrongly attributed work or a forgery—which is fundamentally more challenging to address. In some cases, the title research may reveal an authenticity problem. In general, works of art that have clear and traceable provenance will more likely be authentic.
Notwithstanding the array of resources available to the collector for establishing lawful provenance, there remains an underlying moral obligation to avoid the purchase of art which does not have good title. In their understandable enthusiasm to acquire beautiful works of art, collectors should not lose sight of this fundamental imperative.

Chartwell Bulletins are produced by Chartwell Insurance Services, Inc. an independent insurance broker specializing in the personal asset protection of high net worth individuals. Chartwell Bulletins address issues of general interest and since coverages vary by company and by state should not be taken as an interpretation of a particular policy or advice on any individual situation. Chartwell Insurance Services, Inc. provides art title insurance through ARIS.

A representative of Chartwell Insurance Services, Inc. will be pleased to discuss all aspects of your personal insurance.
Contact: Rebecca Korach Woan | 312. 645.1200 | rwoan@chartwellins.com