As COVID-19 has changed the World, Attorney Daniel Schnapp says that it is more important than ever to protect art investments.
No economic market in the world has been completely unaffected by COVID-19. For those who have made investments in art, it is now essential that they protect that investment. Daniel Schnapp discusses a few important methods available to help art investors do just that.
Many auction houses were closed during COVID-19. That means in-person art sales were on hold. Combine that with global travel restrictions and travel to auctions that are taking place or the transport of items that have been sold is limited. It also greatly reduces the ability of prospective buyers to view and authenticate the art in question.
All of these things raise legitimate concerns about art as an investment in the time of COVID-19. Unfortunately, the resurgence of the virus has left a great deal of uncertainty in its wake. Auction houses that were considering reopening have now delayed those decisions and shipping, storage, and authentication of art is once again problematic. All this is before even considering other issues that are rising in prominence related to coronavirus, such as bankruptcy filings, cyberattacks, and contract breaches for purchase and sales agreements. These are a few things art investors can do to protect their art investments.
Daniel Schnapp recommends investing in fine art insurance. This is specialized insurance protection that can be used to cover art that is displayed in certain locations, on-loan to museums or galleries, and art that is in transit from one location to another – especially in light of COVID-related travel restrictions. The right fine art insurance policy can help mitigate those risks and others as well as the costs of losses to the investors.
Also, make sure to perform due diligence when it comes to provenance research. This refers to the chain of ownership for fine art and includes searches for liens that may exist on the art, claims of theft, and questionable lineage. No one wants to make an investment only to have the item of art and the investment made lost down the road because someone else has legal claims of ownership.
Daniel Schnapp also recommends drawing up specific and detailed purchase and sale agreements so that everyone involved understands their rights and responsibilities throughout the purchase process. The last thing anyone wants is stunning works of art lost to the world and uncertainty over claims of ownership and damages. Or trapped in a purchase agreement they can’t escape even though governments and regulations have all parties in limbo.
Daniel Schnapp also suggests legal documentation every step of the way when allowing art to be sold on consignment, displayed in museums, and even when liquidating assets to avoid or as a result of a bankruptcy.