The ALR’s Services for Banks and Fine Art Lenders

The ALR offers a two-stage due diligence service for banks and art lenders, as follows:

      1. Pre-financing: banks and lenders request an ALR search before taking on a security interest in an artwork, to ensure that they are not loaning against an item for which a claim to title may arise, or which is subject to an existing security interest in favour of a third party. Assuming no issues arise, the ALR will issue a certificate as a record of the due diligence carried out on behalf of the lender. Searches cost from £60 / $80 / €70 and have an expected turnaround time of 7-10 working days, with a 24-hour service available as an option. More detail can be found here.
      2. Post-financing: provided a certificate has been issued, banks and lenders can register their security interest in an artwork on the ALR database. Registering their interest protects lenders against the risk that the item will be unlawfully sold or used as security against further loans without their knowledge. This service is particularly relevant to lenders who permit their clients to retain the collateral, but also offers a useful commercial service to all lenders by providing an alert whenever an artwork they have registered is checked by a third party with the ALR, often in advance of potential refinancing elsewhere.

The price to register a security interest in an item on the ALR database is £120 / $150 / €130. Once an item has been registered, no further fees are payable. Given the speed of transactions in this sector and the risks involved, we always process registrations within one working day.

Registration credits are purchased in bundles and remain valid for two years from the date of payment. We offer a reduced price on bundles of 50 or more registration credits at £100 / $130 / €110 per item.

A minimum fee is charged for purchases of less than three credits to reflect the additional administrative burden. This fee is £300 / $400 / €350.

All prices are ex VAT where payable.

Facts:

  • 15+ years registering the interests of financial institutions across Europe, Asia and the Americas.
  • Hundreds of new registrations of security interests added every year.
  • 35 years working with the international art market to offer a due diligence service, reviewing both public and private transactions.
  • Over half a million artworks per year are searched against the ALR database.

We understand that most jurisdictions offer existing mechanisms to provide legal protection of security interests, such as UCC filings in the USA. The ALR’s service is designed to enhance this protection by offering an early warning system that is neither reliant on the good faith of third parties, nor limited by jurisdiction. This practical protection is designed to avoid the need to ever rely upon, or face the cost and time of enforcing the legal security mechanisms that are in place. In addition, unlike most traditional records, which are borrower-based, the ALR due diligence service is object-based. This reflects the way in which the art market works, and ensures the protection of the artwork itself, allowing risks to be identified even if the identity of the borrower is camouflaged, or the artwork moves across borders.

The ALR’s efforts in this area are led by Charlotte Chambers Farah, with the assistance of James Ratcliffe.