Artwork can now be used as collateral for financing in Belgium
Belgium's new Law on Pledges ensures a source of finance which will stimulate the country's art & finance market, says Brussels lawyer Leo Peeters.
"This specialised type of loan gives players on the art market the opportunity to take advantage of their art collection in order to obtain funds for new investments, to refinance other loans or simply to purchase new works of art."
Leo Peeters, PEETERS LAW, Belgium
Belgium's new Law on Pledges (Security Act / Pledge Act) means that works of art can now be used as collateral / security for financing without them needing to leave the owner's possession. Belgian lawyer Leo Peeters explains that this is an important development for art investors and collectors who need to access finance for new investments or to add to their collections.
Art has been a hugely popular investment product for a long time. Although art investments can be particularly profitable, access to finance is often scotched by the huge costs and time involved in trading works of art.
Things have changed however! To facilitate short-term access to liquid assets for the owners of works of art, some financial institutions in Belgium are now ready to accept works of art as collateral for finance.
Similar to the traditional model of collateral, this system consists of a loan which keeps track of the value of the work of art that is pledged for a predetermined period of time, after which the borrower pays back the money he/she has borrowed.
This specialised type of loans gives players on the art market the opportunity to take advantage of their art collection in order to obtain funds for new investments, to refinance other loans or simply to purchase new works of art. Artists Christo and Jeanne-Claude have used this financing model, funding their large-scale projects by using Christo's huge art collection as collateral for several loans.
Up until now, art collectors were hesitant to use their works of art as collateral. As in Belgium's neighbouring countries, a non-possessory pledge on movable goods has now been introduced that is opposable to third parties provided the goods have been registered in the National Pledge Register.
These reforms bring in a more efficient credit system and new types of finance which could serve to stimulate the Belgium's Art & Finance markets, making it more competitive internationally and appealing to art collectors and investors.
To read the new provisions in full, please read the article Works of art can also be used as collateral for financing on PEETERS LAW's website.
For advice on Belgium's art and finance market
Contact Brussels lawyer/avocat Leo Peeters.