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Artists' Rights to Royalties on Resales

May 18, 2008
Artists are like everyone else in the sense that some are very successful, most are not, and a few are the stereotypical starving artist. The majority of art works go unnoticed and of little monetary value, but a few are in high demand and increase in value over time. The value of the work may not always be in good taste or appealing to everyone, but for some reason or other it is in demand and therefore valuable.

Fine art is often purchased, not only because the buyer likes it, but also because it has the potential to increase in value. Most, if not, all of us have heard of art works selling in the tens of thousands, hundreds of thousands, and even millions. That is really great for the investor, but what about the artist ?

Not every state treats its artists the same, but in California the artist has a right to royalties from the art works. There is a California statute called the California Resale Royalty Act. The statute is codified as California Civil Code section 986. The California Resale Royalty Act has been around for about 30 years and it requires that an artist be sent a royalty payment when his or her work is resold. The royalty payment is certainly not a great percentage of the sale, but does provide some degree of compensation to the artist.

More often than not the artist, the seller, and the buyer on resale of fine art work are unaware of this law, but nonetheless it is the law.

Whenever a sale is made through an auction house, gallery, dealer, broker, or similar agent, the agent is required to withhold proceeds and forward them to the artist. The agent is required to withhold five percent of the sale and forward it to the artist. If the agent cannot find the artist then the agent is required to forward the five percent to the California Arts Council. The California Arts Council will then attempt to find the artist and forward his proceeds. If after seven years the California Arts Council is unsuccessful, it will then deposit the money in the California Art in Public Building Fund.

Not all art is covered under the California Resale Royalty Act. Only fine art qualifies under the statute and fine art for purposes of the Royalty Act includes original painting, original sculpture, original drawings, and original works of art in glass. Nothing else is specified, and probably not covered.

The California Resale Royalty Act has additional requirements, the artist has to live in California or the sale has to take place in California. The art piece also has to go up in value. If the art work doe not go up in value the artist does not share in any resale of the work. The statute only covers art works that sell for at least $1,000. The Royalty Act also requires the artist live in California for at least two years or be a United States Citizen.

What happens if the artist passed away ? What if there was a sale and the artist did not get his royalty ?
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