Buyer Beware: Read The Fine Print When Bidding At Auction

Welcome to the first official post from new Decorati guest blogger and Art Advisor, Emily Waldorf of ArtsEtoile.  This week, check out her helpful hints and tips on navigating the complex world of auctions. 

It is staggering how many auction house clients, including seasoned collectors who should know better, fail to read the fine print when bidding at auction.  In the February 2009 issue of Art + Auction magazine, art lawyers and brothers, Charles and Thomas Danziger discuss how important it is to thoroughly read (and re-read) the conditions of sale before registering to bid at auction.  The Danzigers paint an all too common portrait of how one of their overly trusting clients, Ishmael, fell prey to auction house legalese. 

He embodied the impulsive, acquisitive attitude of the former bull market, collecting works with reckless abandon without fully understanding the auction process:

“Ishmael’s troubles began in the wake of an evening sale that he hadn’t bothered to attend. On the strong advice of an auction house specialist, he had left the winning (and apparently only) bid on a sculpture given as collateral for a loan from the auction house to the consignor. Now the press was calling him a ’sucker’ who had greatly overpaid for the work. ”

Do auction houses have a duty to disclose whether or not they have a financial interest in property being offered for sale?  Collector Halsey Minor thinks so.  He is currently embroiled in a lawsuit with Sotheby’s, alleging that the auction house “actively conceals information concerning its own significant economic interests in property that it places at auction,” and, furthermore, disguises itself as a “sincere and honest art adviser to plaintiff while in reality acting as a self-profiteer.” 

Even if Minor’s allegations against Sotheby’s seem extreme, doing business with auction houses can be a potential minefield. 

Here are five simple guidelines for avoiding your own messy lawsuit when bidding at auction:

-    Pay close attention to disclosure symbols in auction catalogues and always read the fine print in the conditions of sale (which vary from one auction house to another)

-    All lots are sold “as is.”   This means that the buyer cannot return any property after a sale because they notice a scratch or because the dimensions are too big or small for a space. 

-   Try to attend the auction preview before the sale to visit works in person and avoid buying works from catalogue images or jpegs alone

-    In general, only the bold print at the top of the catalogue description (i.e. artist or manufacturer) is guaranteed and there is an expiration date on that guarantee.  If there is an issue with authenticity, it should be brought up as soon as possible after the auction. 

-    Always request condition reports and develop a relationship with an auction house specialist that you trust in your area of collecting.  If you are a first-time buyer, enlist the help of an independent expert who can conduct due diligence

Read Emily’s other advice on Buying Art with Clients and Learning about Art.

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