Tuesday, March 10, 2009

Consigning Art to Financially Troubled Gallery

Dear Rich: I have a question. I am an artist and have a fair amount of artwork on consignment with a gallery that is in trouble. Although we have worked without a specific consignment agreement until recently, I have submitted one for them to sign. Do I need a UCC statement as well? I deliver the art to a company in California that has galleries in several states. I'm so glad you asked. The short answer to your question is that filing a UCC statement can't hurt and may help. Filing a UCC (Uniform Commercial Code) statement (known as a UCC-1 Agreement) at the time of consignment in the county where the gallery is located will elevate you to the level of a secured creditor -- a status that may get you more money than if you were unsecured in the event of a gallery bankruptcy. (It may even result in the return of your artwork). Unfortunately, you will probably need an attorney's help to file it. The tricky issue in your case is the relationship between the company to which you deliver artwork and the galleries -- that is, whether you must file the UCC statement in one county or many counties. (Your attorney can advise.) Some states attempt to protect artists in your position with laws like California's Civil Code Section 1738 et. al. Another approach to protecting art is a consignment agreement. Depending on what it says, it may shield you from some losses (and may be required under some state laws). The Dear Rich staff has prepared a helpful article on consigning art that may answer your questions.