It may look like art but is it kosher or just a clever fake?

What to do if alternative investments turn out to be damaged, stolen or imitation

TV programmes like the Antiques Roadshow have sparked an interest in collecting among many viewers. The alternative investments you buy at auction or from a dealer may one day show a respectable return. But, if you unwittingly buy damaged, stolen or fake goods, there will be no Investors' Compensation Scheme to bail you out. So, just what redress might cheated art and antique buyers have? Let's look at the various problems which may arise.

TV programmes like the Antiques Roadshow have sparked an interest in collecting among many viewers. The alternative investments you buy at auction or from a dealer may one day show a respectable return. But, if you unwittingly buy damaged, stolen or fake goods, there will be no Investors' Compensation Scheme to bail you out. So, just what redress might cheated art and antique buyers have? Let's look at the various problems which may arise.

Damaged Goods

What happens if you buy goods and later discover they are damaged?

In the case of goods bought at a live auction, you will have had the chance to view the various lots in advance, and must accept any faults already there at the viewing. Tom Christopherson of Sotheby's legal department says: "The basis of the auction is that all items are available for view, and bought as seen. Condition, especially of antiques and old works of art, varies a lot and we do stress to all bidders that they should inspect the items first."

Your only chance of redress would come if the damage was done between the viewing and the auction itself. This might arise if auction staff were to drop an item while carrying it from the viewing room to the auction room, for example. In cases like this, the auctioneer might agree to refund part or all of your purchase price.

In the case of internet auctions, personal viewing is obviously impossible. Sotheby's deals with this problem by guaranteeing the description of each article which appears on its internet auction sites. Any item which turns out not to accord with its description when it is delivered can be returned to the auction house for a refund.

When it comes to antique shops, try and select a dealer who belongs to a recognised trade association such as Lapada. This organisation's code of practice governs some 2,000 antique dealers around the UK, and members can be identified through window stickers.

Buying in an antiques shop means you can inspect the goods in person before you buy, and the basic rule once again is that you buy what you see, warts and all. Not all flaws will be detectable by the layman, however, and Lapada's code is clear that dealers must give potential buyers all the relevant information they reasonably can.

Lapada chief executive Malcolm Hord says: "If you buy a chair from an antiques dealer, he should tell you if one of the legs has been replaced. If he goes through the piece with you without saying the leg has been replaced, they would be required to take back the piece. But not everyone is a member of Lapada." In cases where the dealer does not merely omit to mention something relevant, but actually lies about the article's true condition, you may have a case in law.

It is also worth thinking about possible damage inflicted by the delivery company which brings large items from the dealer's shop to your home. Here any recompense for damage would have to come from the delivery company's insurance cover. If you are buying something particularly expensive, Hord suggests using a specialist firm recommended by the dealer you bought from and checking to ensure the carrier has adequate insurance.

Stolen Goods

What happens if you buy goods which turn out to be stolen?

Whatever route you use to make your would-be purchase, the seller of stolen good has no right to transfer their title to you, even if the seller himself did not know the goods were stolen at the time.

When it comes to stolen goods, your best protection is to buy through a big-name auction house which widely distributes details of all the items it plans to auction well in advance and sends details of all its upcoming lots to The Art Loss Register for inspection. The ALR is a catalogue of stolen art and antiques which auctioneers can use to vet prospective lots ahead of any auction sale.

Mr Christopherson says: "The way we deal with this is to do absolutely everything we can to flush out stolen goods before they get to the auction. People can write to us before the sale to say they have a question mark over a certain lot, and at that point we would withdraw the lot from sale."

Julian Radcliffe of The Art Loss Register adds: "We undertake some 250,000 checks of the major auction house lots every year, and the number of stolen items in their catalogues has declined since 1991. However, the smaller provincial auction houses have resisted signing contracts with us for searching their catalogues. All buyers at auctions should ask the auction house to state that they have checked our database and, if they have not, ask them to do so before they bid."

Stolen goods bought in an antiques shop must be returned to their true owner and the buyer's purchase price refunded by the dealer involved. Mr Hord says: "The goods are given back to the true owner, and the dealer is left out of pocket unless he in turn can go back to his own source of purchase and say 'I want my money back'."

Forged Goods

What if you buy goods which are undamaged and sold by the true owner, but happen to be forged?

Both Sotheby's and Christie's say they will cancel the sale and refund the purchase price on any goods they sell which are proved to be forgeries, providing they are notified in writing within five years of the auction sale. Bonhams insists that cases be brought within one year.

Christie's defines a forgery as an item which was made with the intention to deceive, which does not accord with its description in the auctioneer's catalogue, and which - at the date of the auction - had a value materially less than it would have had if its true origins were as the catalogue described them.

You may not get your refund if the auction house can successfully argue that its catalogue description was in line with the consensus of expert opinion at the time or fairly indicated that there was a conflict of opinion. The auction house may also escape liability if it can show that the item was revealed as a forgery only through scientific tests not available when the catalogue was published or one deemed unreasonably expensive to carry out.

On the question of forged goods sold in a shop, Mr Hord says: "If anything is wrong with the goods, then the goods are taken back and the money is returned. If the dealer has deliberately been deceitful, then that's prosecution."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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