Why do I need ARIS ATPI®? Should I buy ARIS ATPI® for currently owned art?  How does ARIS underwrite legal title to art? Does ARIS ATPI® cover authenticity? What if ARIS finds that my art has defective title? What does ARIS ATPI® cover? "It won't happen to me."

“It Won't Happen To Me”

Many a fiduciary, advisor, collector, museum professional, intermediary or investment advisor working with art has said at one time or another “It won’t happen to me (or my client).”  But, as everyone in the art world knows, no provenance is perfect.  Every work of art does have a history.  

Consider the following art title scenarios, fictionalized here but based on recent events in the art world:

Estate Planning Problem:  A U.S. seller provides a buyer with a negotiated twenty-year indemnity to cover a title claim and dies shortly after the transaction closes.  In most U.S. states, the estate will formally close if a claim against the estate is not filed within one year of the death.  If a claim in this instance is timely filed, what is the mechanism to hold open the estate for the twenty-year indemnification period; will a court hold the estate open for such a period; who will manage the estate and pay the associated costs for the twenty-year period?  What if the claim is not known until years down the road, can it still be filed?  If the estate can be reopened, what are the potential implications for all of the heirs of the estate?  And given these unique circumstances, what duty does the estate or its representatives have to notify the buyer of the seller’s death right after the sale – and what legal liability flows if they do not make this disclosure?  And for the buyer who has requested indemnity from the seller for some reason, what duties does this buyer have to the next purchaser?  

ARIS ATPI® Solution:  An issued ARIS ATPI® policy will effectively insure over the twenty-year private guarantee (or can for a longer period) by directly insuring the legal title to the art.  ARIS ATPI® would allow the estate to close and would protect the buyer if a title claim were made against the buyer at any time during the buyer’s ownership, just as the buyer originally wanted.  Securing ARIS ATPI® in the beginning would directly prevent a very uncertain and complex legal and financial problem.  

Auction Problem:  An owner of a painting consigns the painting to a major auction house for sale.  The day before the scheduled auction, the auction house informs the seller that it must pull the painting from the auction because a judgment lien has been asserted against the painting.  After significant negotiation, all parties involved agree that the painting will be sold at the scheduled auction, the judgment lien claimant will receive the proceeds from the sale up to the dollar amount of the lien, and the consignor will receive any remainder.  Separately, the owner/consignor and the dealer who originally sold the painting to the owner agree to "work out" later a means to pay the owner for any shortfall in the auction proceeds.  

ARIS ATPI® Solution:  If the buyer had received ARIS ATPI® coverage at the time of purchase from the dealer, the buyer/later consignor would have been protected at the time of the auction for the cost of investigating and resolving the judgment lien and for coverage of his original purchase.  Further, with a third-party guarantor able to act for the benefit of the consignor, the conflicting dynamics would have been greatly reduced.  The facts of a given case might ultimately enable a consignor to proceed to auction and receive the proceeds of the sale, the judgment lien holder to receive the money for the judgment lien, and the first dealer not to be involved in the process, all facilitating the auction to the ARIS ATPI® insured’s interests.

Charitable Gift Problem:  A donor gifts an important painting to a museum.  The donor is later convicted of corporate fraud related to corporate funds used to purchase the gifted work, which unwinds the charitable gift to the museum.  Already, however, the museum has committed the gifted work to an exhibition at a number of other museums and has deaccessioned art from its permanent collection based on the direction it has now taken for the collection based on the gifted painting.  Upon the unwinding of the charitable gift, the institution must give back the painting, can no longer meet its exhibition commitment to other museums based on this painting, has lost access to the works it had de-accessioned, and has incurred financial constraints because of using the money from its deaccessioning activities for collection building based on the gifted work.  

ARIS Solution:  If the institution had required ARIS ATPI® at the time of charitable gift, the institution would have had protection for financial loss as a result of the incomplete, defective gift.  

Art is forever, now so is ownership.  Let ARIS protect you and your art.