Droit de Suite - a seller's or a buyer's royalty payment?

Why do Auction Houses charge the BUYER the royalty due to be paid by the SELLER?

Why do Auction Houses charge the BUYER the royalty due to be paid by the SELLER?

Since originally writing this the situation has become far worse. Droit de Suite now has to be paid twice by dealers on work by artists WHO HAVE BEEN DEAD FOR UP TO 70 YEARS, EVEN IF SOLD FOR A LOSS!! Many of the artists and their descendants will be untraceable, and in the cases of many who are, proceeds will go to co-lateral rather than direct descendants!

II WHY??? The artist has already benefitted from selling the picture once at a price that was deemed corect at the time and heirs will have benefitted from the inclusion of such somes being part of their estate at some time. It also seems that money paid in cases where not even co-lateral descendants can be traced will be returned to dealers AFTER 6 YEARS AND WITHOUT INTEREST! I have incurable lymphoma and will probably be dead myself by then!

I've been trying to investigate a worrying anomaly I've discovered in the current Droit de Suite regulations where it is totally clear that all auction houses are reacting against Section 13 and the related explanatory note of Statutory Instrument 2006 No. 346. They charge the buyer (i.e. art dealers) Droit de Suite, whereas they should be charging the seller or paying it themselves. Dealers make the payment a second time when selling.

Conditions of sale in most UK auction houses catalogue state the following, or something very similar: Except as otherwise stated *** acts as agent for the seller. The contract for the sale of the property is therefore made between the seller and the buyer.
If the Artist's Resale Right Regulations 2006 apply to the lot the buyer also agrees to pay us an amount equal to the resale royalty provided for in those Regulations and we undertake to the buyer to pay such amount to the artist's collection agent.The relevant part of Section 13 is as follows:Liability to pay resale royalty
13. -(1)The following shall be jointly and severally liable to pay the resale royalty due in respect of the sale-
(a) the seller; and
(b) the relevant person (within the meaning of paragraph (2)).
(2)The relevant person is a person who satisfies the condition mentioned in regulation 12(3)(a) (the buyer or the seller, or (where the sale takes place through an agent) the agent of the buyer or the seller, is acting in the course of a business of dealing in works of art) and who is -
(a)the agent of the seller
(b) where there is no such agent  (in the case of an auction house there is always an agent of the seller; the auction house!) the agent of the buyer; or
(c) where there are no such agents, the buyer.

The relevant Explanatory Note reads:
Regulation 13 makes a specified art-market professional involved with the sale jointly and severally liable with the seller. The art-market professional who is so liable is the agent of the seller, if any, or failing that the agent of the buyer, or (again if there is no such agent) the buyer. Thus where the agent of the seller is a professional, that agent will be liable; the buyer who is a professional will be liable only if no professional is involved either as an agent of the seller or the buyer.

I have highlighted the most relevant parts of the Statutory Instrument thus showing how auction houses have utterly disregarded it for their own pecuniary interest and against the financial interests of art dealers. As far as the first resale payment is concerned (N.B. this is a selling NOT a purchase tax) they refuse to pay it, despite their very clear obligation to do so as agents of the seller. Their conditions of sale have been used to avoid their legal obligation to pay royalties at any point in the carrying out their duties as agents of the sellers of work by living artists. I suggest that all dealers effected by this contact the auctioneers concerned whenever they receive a catalogue saying that they are responsible for the Droit de Suite payment, reminding them that it is not they who are responsible, but the auction house themselves, as it is effectively a selling and not a buying tax.

How can dealers afford an extra 8% 'tax' on the full buying and selling price in the present economic climate? It is as unfair as it is absurd!

I hope that some will feel strongly enough not to bid on such items and to inform the auction house.What I would most like to happen is for dealers to agree together a specific period when they would, collectively, boycott bidding on items where they would be forced, as buyers, to pay a sellers dues.

Please email me through this website if you would be interested in a temporary boycot.

Rosamund Jordan

 

 

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