Artists as Real Estate Barons?

You own a warehouse in a gentrifying urban area. A collective of local artists requests to paint a mural on the exterior of one of the warehouse's walls. Cherishing the opportunity to view yourself as a benefactor of pioneering urban art, you say yes. Your show of patronage is consummated with hand-shakes at the new neighborhood coffee shop. You, of course, didn't ask for anything in return. You happily repressed your impulse to call your attorney to ask him what he thought about allowing some unknown artists you met only weeks ago to use your multi-million dollar investment as their canvass without requiring them to sign anything. After all it is your property and you are allowing them to use it for free so there is nothing they will be able to (or dare to) do when you receive an offer (which you clearly remember informing them that you expect to receive at some point) from a developer who will demolish the building to make room for an apartment complex.  

As expected, the area continues to develop. The mural is now a must-see local tourist site and it, along with the artists, have attracted media coverage. You finally receive your offer and inform the artists. Several weeks before the closing, the artists sue under the federal Visual Artists Rights Act of 1990 ("VARA") to enjoin the sale of your property and for monetary damages if the mural is destroyed or altered in any way.

VARA, among other things, gives the author of a "work of visual art" the right to prevent: (i) "any intentional distortion, mutilation, or other modification of that work which would beprejudicial to his or her honor or reputation" and; (ii) "any destruction of a work of recognized stature."  "Work of visual art" is defined by VARA as "a painting, drawing, print, or sculpture, existing in a single copy" or in a limited edition of 200 copies. VARA specifically excludes certain works from the definition of "work of visual art."  For example, the definition excludes "any work made for hire," which is a work prepared by an employee and "applied art" which is essentially decoration that is affixed to utilitarian objects.

Although the applicability of VARA does not depend on whether the work at issue is made part of a building (for example, VARA has been used to prevent the alteration of an art installation in a museum), VARA rights are most often exercised in circumstances in which the work is made part of a building. VARA expressly applies to works that have "been incorporated in or made part of a building in such a way that removing the work from the building will cause the destruction, mutilation, or other modification of the work" unless: (i) the author consented to the installation of the work in the building before June 1, 1991; or (ii) the author waives his VARA rights in writing (more on waiver below). VARA only protects works that have been legally placed on the property with the owner's consent.

The term "recognized stature" has been applied broadly to encompass non-conventional forms of art. In perhaps the most widely publicized VARA case ever (which inspired the above hypothetical), the judge found that there was a possibility that the exterior aerosol art (i.e., graffiti) located at 5Pointz, the graffiti mecca in Long Island City, Queens, would later be found to be of "recognized stature" at trial.  Although the judge only ruled on the artists' request to enjoin the demolition of the buildings that contained the graffiti, and therefore was not tasked with making a final decision as to whether the works were protected by VARA, the decision provides legal precedent to support a broad application of the term (and in his decision the judge was highly and unusually candid about his admiration for the works and his desire that they be preserved). If an author does not succeed in arguing that the work is of recognized stature, he can still win if the destruction of the work is found to be "prejudicial to his or her honor or reputation" which does not require that the author have any standing in the artistic community. Even if an author does not have a good case for VARA protection, the malleability of these terms alone ensure that a property owner will expend significant legal fees to defend a suit or settle, or both.

VARA provides several avenues to avoid liability, which have limited use. First, an author's rights "may be waived if the author expressly agrees to such waiver in a written instrument signed by the author . . . . [which] shall specifically identify the work, and uses of that work, to which the waiver applies, and the waiver shall apply only to the work and uses so identified." In the case of a joint work prepared by one or two authors, a waiver of rights made by a co-author waives the rights for all co-authors.  If the property owner does not demand the waiver at the time he consents to the work, he will have no leverage to demand the waiver afterward (unless, of course he pays for the waiver).

Second, if the property owner "wishes to remove a work of visual art which is part of such building and which can be removed from the building without the destruction, distortion, mutilation, or other modification of the work," then the property owner may remove the work without incurring liability if: (i) the author fails to respond to the owner's "good faith attempt . . . . of the owner's intended action affecting the work of visual art" or; (ii) the owner provided the notice in writing and the author "failed, within 90 days after receiving such notice, either to remove the work or pay for its removal."  This notice provision will not be available to the property owner if the work is a painting or drawing on the exterior wall of the building, as was the case in the 5Pointz case (and our in hypothetical).

There is no reason why a property owner should ever face a VARA lawsuit. When he consents to the placement of a work on his property he is providing value to the artist and can therefore reasonably require that the artist waive or limit his rights under VARA. VARA will become more relevant as gentrification and urban art continue to collide. Recently, the New York Times reported on a mural painted by graffiti artists on a building in the West Bronx as a show of resistance against growing gentrification.  The article states that the artists received the building owner's approval. For the owner's sake let's hope he called his attorney before he gave his approval.

About the authors:  Eric Snyder is a Partner at the law firm Wilk Auslander LLP in New York. He has advised and represented landlords in a range of litigation and transactional matters.Eloy Peral is an associate in the firm's litigation practice and has worked on a variety of real estate cases. Both attorneys are members of the firm's bankruptcy practice, and specialize in real estate-related matters.  They may be reached at:  esnyder@wilkauslander.com, 212-981-2328 and eperal@wilkauslander.com, 212 981 2316.

This article was originally published in Real Estate Weekly.