In Massachusetts, art galleries who sell art on consignment have a duty to “show the accounts of each [artist] separately on its books”. A gallery can satisfy this duty by keeping sub-accounts in it’s bank for each artist.
This burden arises because art in the hands of a dealer and proceeds from any sale are considered trust property in Massachusetts. Galleries must pay artists within 90 days of sale.
Failure by a gallery to pay out in time could subject the gallery to interest, attorneys fees and costs, and damages up to three-times the amount owed to the artist. Failure to properly account for the art in bank accounts go potentially give rise to causes of action for breach of fiduciary duty to the artists.
If you would like help complying with Massachusetts laws, or have questions about how they apply to you, drop Modern Renaissance Legal a line.