Buyers should be wary of buying works of art that are fakes, have been stolen or have the wrong value attached. Experts say collectors should ask several questions before buying a work of art.
Firstly, are you buying from the rightful owner? ' Unlike real estate, there is currently no register of ownership for works of art, but there are registers of stolen property such as the Art Loss Register,' says Pierre Valentin, a partner at international law firm Withers.
'Some auction houses search these registers as a matter of course, but many dealers do not, so if you buy from a dealer, you should agree in advance who will run the search.'
It is also important to research the history of the work of art in order to ascertain whether you are buying from the rightful owner. Invoices, shipping documents, insurance certificates and private correspondence can establish a chain of possession pointing in the direction of the current owner.
This research can point to a gap in the ownership history.
'This should be investigated because if the art was looted, the person who lost it, or their family, may claim it back,' Valentin says. 'Even in the absence of a claim, it may only be worth a fraction of the market value of a similar but 'untainted' piece.'
Another issue prospective buyers should research is: has the art been correctly attributed to the artist? If the art is ascribed to an artist, when in fact it was created by another, you may be paying considerably more than its market value.
The same applies if the art is attributed to an artist when it was produced by a contemporary or by his studio but not the artist personally.
Valentin cites the example of an American collector who, a few years ago, thought that he had bought a Van Dyck from a well-known English dealer for GBP1.5 million (HK$18.2 million). 'He relied on the opinion of the dealer and not on the differing opinion of a scholar disclosed by the seller at the time of the sale,' he says. 'When a dispute over attribution erupted, the court found that the painting was not by Van Dyck, and the collector had no legal recourse against the dealer.'
Buyers should also be wary of purchasing copies. 'You may find yourself in the unhappy situation of a Canadian collector who purchased a pair of 18th century vases at an auction,' Valentin says. 'She was told the vases were original and she paid nearly GBP2 million for them. Doubts were later expressed that the vases might not be original after all, but later copies worth about GBP25,000. The court decided the auction house had not been negligent in cataloguing the vases as original and she had no recourse against it or the seller.'
Information arising from inquiries can prove invaluable when you decide to sell a work of art, Valentin says. It can help you if your ownership of the art is challenged while it is in your possession. 'Do not throw that information away.'