Painting over Property Rights: The Effect of the Visual Artists Rights Act on Real-Estate Development

Gray Reed
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Gray Reed

The Lillian Corporation purchases a vacant and dilapidated office building with plans to demolish it and build luxury condos. Only one thing stands in the way: a mural on the side of the building painted years earlier by a well-known local artist, Phillip Semenko. The mural is renowned and become a popular destination for tourists. After learning of the Lillian Corporation’s plans, Semenko threatens to sue to stop the development. Will Semenko succeed or is this just another case of artistic temperament?

Semenko can bring the Lillian Corp.’s plans to a halt using the Visual Artists Rights Act of 1990 (VARA), an obscure federal copyright statute that can deprive property owners of their traditional rights to develop, modify, and dispose of their own property. The VARA grants artists who create “works of visual art” so-called “moral rights” that allow those artists to control their work even if they have sold it and have no contract with the work’s current owner. One of those moral rights is the right to integrity, which, among other things, prohibits the destruction of any “work of recognized stature” without the artist’s actual consent.

At first blush, VARA’s protection of integrity rights seems unnecessary. A work by a well-known artist or one that achieves “recognized stature” is likely valuable, creating ample incentive to preserve it in good condition. And paintings and smaller, mobile works are likely to be worth more than the costs of moving them, so they will not be intentionally damaged or destroyed. As a result, VARA typically comes into play when an obscure artist creates a large-scale site-specific art or sculptural work installed in a building. These works are likely to be damaged or destroyed if they fall out of favor or stand the way of future building renovation or other development. Unsurprisingly, property owners and developers have been the most common defendants in suits brought under VARA to date.

The Second Circuit’s recent decision affirming a $6.75 million award demonstrates the serious consequences of violating VARA. Castillo v. G&M Realty, L.P. involved a series of dilapidated warehouse buildings known as “5Pointz” in Long Island. The owner, Gerald Wolkoff, allowed a “distinguished aerosol artist” to turn the warehouses into an exhibition space. Over two decades, some 1,500 graffiti and street artists adorned 5Pointz with colorful murals, turning it into popular stop for tourists, celebrities, and art buffs. It was acclaimed as a “Graffiti Mecca.”

But, in 2013, Wolkoff received the long-sought municipal approval to develop the property as a residential apartment complex, which would require demolition of the existing buildings. The artists then sued under VARA, seeking to enjoin construction. After the district court denied their request, Wolkoff whitewashed virtually all of the graffiti at 5Pointz.

Although the artists were unsuccessful in preventing destruction of their work, they did recover substantial damages. After a three-week trial, the district court concluded that forty-five of the murals had achieved “recognized stature” and that Wolkoff willfully violated VARA by destroying them. The district court did not award any compensatory damages, since it could not fix the market value of the destroyed murals. But it awarded the maximum amount of statutory damages: $150,000 for each work, for a total of $6.75 million. On appeal, the Second Circuit affirmed, concluding that the evidence supported its findings that the graffiti at 5Pointz had “recognized stature” and Wolkoff’s whitewashing was an “act of pure pique and revenge for the nerve of the [artists] to sue to attempt to prevent destruction of their art.”

To avoid the legal woes that beset Wolkoff, property owners and developers should be familiar with VARA whenever they plan to install art at an existing site or modify a structure that incorporates artwork.

What Does VARA Protect?

VARA protects a “work of visual art”, which is defined as a painting, drawing, print, sculpture or still photograph. It must be signed by the artist and be a single creation or part of a limited edition of 200 copies or less, each numbered consecutively. Works of visual art that may be incorporated in buildings include murals, mosaics, sculptures, fountains, stained glass windows, and frescoes.

When Can Artwork Be Removed from a Building?

As noted above, VARA grants the artist the right of integrity in a work of visual art. The property owner’s ability to remove an integrated work from a building will depend on whether it can be accomplished without damage or destruction.

If the owner can remove the work without damaging or destroying it, VARA sets out a procedure by which the work can be removed without the artist’s consent. The owner must make a “diligent, good faith” attempt to notify the artist of its intent to remove the work. If the artist has recorded an address with the Register of Copyrights, mailing a registered letter to that address would suffice. After being notified by the property owner, the artist has ninety days to remove the work at his own expense. If the artist does not remove the work within that ninety-day period or the attempts to contact him were unsuccessful, then the owner can remove the work, provided that doing so will not modify or destroy it.

If removal would damage but not destroy the work, it cannot be removed without the artist’s consent, regardless of whether the work is of “recognized stature.” In those circumstances, the owner of the property must adapt its use of the building to the continued presence of the work.

If removal will cause destruction of the work, the owner must determine whether the work is of “recognized stature.” Frustratingly, VARA does not define “work of recognized stature.” Courts have held that a work qualifies if it is viewed as meritorious by art experts, other members of the artistic community, or by some cross-section of society. While the most important component of stature is artistic quality, courts have stated that the work need not be equal to those created by artists such as Picasso, Chagall, or Giacometti. Nor must the judge or jury find the work to be aesthetically pleasing.

Under that nebulous standard, it is impossible to determine objectively whether a work is one of “recognized stature.” Expert testimony is typically necessary to establish recognized stature, and it will not be difficult for an artist to find someone else in the community to opine that the work is meritorious. In fact, one court has held that the mere fact that a sculpture was mentioned in newspaper and magazine articles was some evidence that it had achieved recognized stature.

The lack of clear and discernable standard is especially troubling, because a finding that work has achieved recognized stature deprives the owner of his property rights. If a work of recognized stature cannot be removed without destroying it, VARA prohibits its removal without the artist’s consent. The owner will become the perpetual curator of artwork that has lost—or never had—its luster.

Does VARA Require the Preservation of Artwork?

No. The damages or destruction of work that results from negligence, the passage of time, the nature of the materials, or failed conservation efforts does not violate VARA. The property’s owner does not have an affirmative duty to spend resources in preserving the work in good condition. Additionally, an owner that negligently or inadvertently damages the work is not liable under VARA.

Who Can Sue Under VARA?

Only the artists who created the work can sue under VARA, and they may do so even if they have not retained ownership of the copyright in the original work. Because moral rights flow form the artist’s creative process and personality vested in the work, they are not transferrable. VARA’s protections last for the lifetime of the artist or, if more than one artist contributed, the life of the last surviving artist.

VARA, however, does not protect a “work for hire,” which is a work prepared by an employee acting within the course and scope of his employment. What constitutes a work for hire is not always clear but depends on balancing a number of factors, including the right to control, the requisite skill involved, whether the artist received employment benefits, and how the artist was treated for tax purposes.

What Are the Remedies for Violating VARA?

Violators of VARA face liability for actual and statutory damages. The statutory damages may range from $750 to $30,000 per work “as the court considers just.” But if the court finds that the violation of VARA was committed willfully, it can increase the award of statutory damages to $150,000 per work, as the district court did in Castillo. The court can also issue injunctive relief and award attorney’s fees to the artist.

Titling the Scales in Your Favor

There are a number of steps that current and future owners of property can take to protect themselves from liability under VARA:

  1. Obtain Written Waivers from the Artist Before Installing Any Artwork on the Property. An artist’s rights under VARA can be waived if the waiver is (a) in writing, (b) signed by both the artist and the owner, (c) specifically identifies the work and the uses of that work to which the waiver applies, and (b) specifies that the removal may subject the work to destruction, distortion, mutilation, or modification by reason of its removal. The waivers survive the sale of the property.
  2. Include Provisions in Any Leases Limiting the Tenant’s Right to Install Artwork on the Property. If the owner leases any portion of the property, it should consider including a provision in the lease that requires the tenant to obtain a waiver of the artist’s rights under VARA or the owner’s written consent before the tenant installs any work that might be considered art on the property. The owners should also consider including a provision requiring the tenant to indemnify the landlord for any claims under VARA.
  3. Consider the Implications of Buying Property with Incorporated Artwork. Potential purchasers of property, particularly developers, should consider adding an analysis of VARA rights to their checklist of due-diligence items. If the owner installed works of art on the property without any waiver from the artist and the buyer’s plans will require destruction or alteration, then the buyer should consider escrow or indemnification to cover any future claims under VARA.
  4. Consider Preserving the Artwork if Possible. To avoid any liability under VARA, the owner should considers ways to preserve the work by moving it intact, encasing it, or building around it. VARA does not require the owner to present or display the work. And one court has held that a property owner would not violate VARA by constructing building that obstructed the view of murals, because the murals would remain intact.

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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