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Title insurance is a topic that’s often overlooked. It protects against financial loss from defects, and is traditionally used—or even required—in real estate transactions. And in the multi-million dollar art market, nothing could be more essential than protecting the investment of art.

Mary Buschman, a Sotheby’s Institute alumna, was recently appointed president of ARIS Title Insurance, a pioneering enterprise in title insurance for fine art and other important collectibles and currently the only underwriter of art title insurance. She spoke to fellow Institute alumnus—and host of the ArtTactic podcast—Adam Green on the topic and trends around protecting art investments, mitigating the risk to collections, and ensuring an artwork's legacy and legitimacy.

Here’s what you should know about title insurance:

  • It ensures ownership. Due to lack of regulation and international standards, art title insurance policy is the only way for collectors and institutions to ensure they have complete ownership of their property.
  • It identifies risks to selling. If a claim arises, the current possessor might lose the work, lose their investment, and might even have to pay legal costs. Most people think about cases involving historical risks, like World War II and Nazi restitution cases. But frequently overlooked risks also include creditor and bankruptcy liens, consignment questions, and inheritance matters, which might affect the authority to sell a work.
  • Art title insurance isn’t just for older works that are exchanged on the secondary market. Pieces by contemporary living artists merit the surety of protection to validate that the dealer, gallerist, or broker has the authority to sell the work.
  • It protects against unknowns. Art title insurance can also protect against challenges that have arisen from the globalization of the art market, such as antiquities looting, money laundering, customs, and cross-border situations.
  • It requires research. Before a work can be protected by title insurance, extensive research is undertaken. This includes a close look at the provenance and history of the art. But the client is also researched to answer the question: do they have the authority to sell the piece?
  • It comes with a fee. A typical premium is a one-time fee that averages between two and three percent of the full market value, or purchase price, of the art work.
  • It is becoming the norm. In the last year, Buschman reports that there is a growing trend of institutions protecting their collections and acquisitions through art title insurance, notably museums acquiring works in the low six-figure range. These lower to mid-price points shows a momentum toward accepting this regulation as a normal part of transactions—it’s not just for blockbuster sales.
  • Title insurance is not just for people or organizations protecting a new investment. More private dealers who are doing back-to-back transactions are using it to provide reassurance that when a transaction is completed, the title—and their reputation and revenue—is protected.
  • Warranties can be short or long-term. A warranty for a title for auction houses is generally five years. Art lending platforms can pursue protection during the term limits of the loan. And savvy collectors are thinking long term to protect collections left to heirs and future generations.

Listen to the full interview between alumni Mary Buschman and Adam Green on the ArtTactic podcast here.

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