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New York Gallery Closures and Legal Impacts for Artists

March 4, 2025

Collage with images announcement of closed galleries

By Carla Frade

Home to more than 760 galleries with at least one paid employee, as well as the top-tier and highest-end galleries in the US, the New York gallery scene is estimated to account for up to 90% of global sales’ value.[1] Despite the superlative numbers, the City has seen a wave of gallery closures from 2023 that has alarmed market observers.[2]

Denny Gallery[3] (10 years in business), JTT[4] (11), David Lewis Gallery (11), Simone Subal Gallery[5] (13), Jack Hanley[6] (37), Malin Gallery[7] (8), Foxy Production[8] (20), Queer Thoughts[9] (11), Marlborough[10] (78), Cheim & Read, Alexander & Bonin Gallery (28), Fortnight Institute (8), Helena Anrather Gallery[11] (7), Deli Gallery[12] (8) and Nancy Margolis (50) are some of the names that make up that trend. As seen from the parentheticals, many had been in operation for over a decade, and had the distinction of showcasing works of some of the current darlings of the collecting world.

Another group of galleries has opted to transition into alternative business models: gallery Mitchell-Innes & Nash (est. 1996) has become a “project-based advisory space”[13], while Chelsea veterans Betty Cunningham Gallery (est. 2004) and Washburn Gallery (est. 1971) announced they were moving their operations exclusively online;[14] in early 2025, Latin American art galleries Proxyco and Instituto de Visión announced a collaborative model while keeping their businesses separate[15]. Museums and cultural institutions are also undergoing similar transformations.

These changes underscore the fact that owning and operating a gallery is not necessarily smooth sailing. In fact, for small or mid-size galleries, which make up most of the NY scene, this can be a rather unpredictable and volatile one:[16] according to a New York Times reporting, “[i]n a slow month, a dealer might be uncomfortably in the red; in a busy month, they might accrue enough revenue to cushion them for the rest of the quarter. And one sale could make the difference between a good month and a lousy one.”[17] For a business that often runs on slim margins,[18] every risk-taking opportunity needs to be rigorously assessed.

A particularly tough time to be a gallerist …

What is the reason why over a dozen galleries decided to close their doors in the last couple of years?

First, important market shifts have taken place over the past five years which have been slowly eroding the brick and mortar gallery model. The most prominent one may just be the increasing shift of art sales to online methods. The COVID-19 pandemic was surely a catalyst for this movement when it fueled a surge in online art sales, which reached a historic peak of $13.3 billion in 2021; although sales have since dropped to a total of $11.8 billion in 2023, or 18% of the total art market turnover and 23% of dealer sales, this is still more than double the levels of 2019, or any year before that.[19]

This includes online art platforms, such as Artnet, Artsy, Saatchi Art and Law & Art, but perhaps most importantly social media, with Instagram and TikTok being the most popular platforms for direct sales. With collectors having access to a myriad of artists at the palm of their hands, the temptation to cut out the middle man might just be too strong.[20] This, coupled with a decline in foot traffic – the number of Americans visiting museums and galleries dropped from 24% in 2017 to 18% in 2022[21] – has left galleries struggling to have their physical presence remain relevant.

Second, high interest rates and inflation have impacted galleries’ profitability, both from a revenue and costs perspective. As to revenue, they have led collectors to spend less, as those who view artworks as financial assets have flinched at the rising costs of doing business and the diminished ability to get favorable loans to buy paintings they hope will appreciate in value.[22] Sales in the private gallery sector slowed in 2023, with aggregate sales estimated at nearly $36.1 billion, down 3% year-on-year.[23]

From a cost perspective, they have made the gallery business model increasingly expensive to run.[24] Rent today can be staggering, with an average ground-floor gallery space in West Chelsea or TriBeCa costing around $100 per square foot, and up to two to three times as much in the Upper East Side.[25] Art fairs, which are an important tool for smaller galleries, are also increasingly expensive to attend – booths can cost thousands of dollars, and air fares fees have become steep –, which render these events gamble investments.[26]

… and a tougher time to be an artist?

How does a gallery closure impact artists? To answer that question, it is important to remember the different roles galleries perform for artists.

In what is the most visible face of their work, galleries represent artists by offering their artworks for sale to collectors, museums and other influential art-world tastemakers.[27] The other, less visible one, is that of providers of art services, such as managing the whereabouts of the artworks, making sure they are safely stored, installed, transported and accounted (registration, photography, catalogues) for, and, in some cases, acting as financial service providers, by advancing expenses to cover fabrication costs and even helping out in times of need.[28]

Each of these roles implies a different legal relationship – whether this is formalized or not. The first is that of an agency relationship, by which a gallery will work to sell the artist’s works on his or her behalf. The scope of the representation is defined by the parties, and can range from full and exclusive representation to a non-exclusive and limited (to a specific location and/or a specific medium or collection the artist produces) one.[29] The representation agreement will also govern how the gallery will be paid (typically a commission of 50% of sales), accounting procedures, as well as duration of representation.[30]

Once representation is established, artists will typically hand their artwork for the gallery to sell. Here, a consignment relationship will be established, by which the gallery will hold possession of (but not title to) the artworks with the specific objective of selling them under the representation agreement.[31] A consignment agreement should list all the works given to a gallery by the artist, a gallery’s obligation to take proper care and conservation measures (including insurance), as well as accounting procedures that will allow for regular updates on which works were sold and which remain in its possession.[32]

In light of the above, a gallery closure may raise two main legal issues:

Outstanding payments

First, it might be the case that the gallery has sold artworks on behalf of an artist, but did not yet remit the artist’s share of the purchase price. Because the gallery is deemed an agent of the artist, the law holds them to more rigorous ethical standards, namely the fiduciary duties of loyalty and care, that render unjustified tardiness a serious flaw.[33]

Historically, a few galleries that were in the red for too long helped themselves to the money belonging to the artists they represented. New York’s Artist Cultural Affairs Law (ACAL) was amended in 2012 to provide important protections to artists and their estates in situations like this.[34] To ensure that sale proceeds are not misappropriated by dealers, the ACAL renders the gallery a trustee to the artist’s property, which requires it to place sales proceeds in a protected trust, where artists’ funds can be kept separate from the gallery’s operating budget.[35]

If a gallery fails to “hold in trust” and remit the artist’s share of the purchase price in a timely manner, an artist may sue to obtain the amounts due and/or recover damages for breach of fiduciary duty. To incentivize artists to pursue what is rightfully theirs, ACAL §12.01.3 provides for the awards of attorneys’ fees to the prevailing plaintiff. This means that, if the court finds in the artist’s favour, the costs of reasonable attorneys’ fees are to be paid by the gallery.[36]

Access to works left on consignment

Because galleries have the physical custody of the works of art, a sudden gallery closing can impact an artist’s access to their work. Unpaid storage bills, for instance, can lock up an artist’s work indefinitely.[37] In addition, the artwork might be sold off as collateral for any unpaid money the artist borrowed from the gallery or even for gallery debts towards creditors.

The Uniform Commercial Code’s (UCC) Section 9-102 contains important provisions regarding consignment contracts, such as the criteria and value of goods classified under consignment and consignor’s (i.e. artist) rights in the event of bankruptcy.[38] The UCC, however, has a problematic provision that allowed consigned artwork to be eligible for seizure by creditors looking to fulfill a gallery’s unpaid debts – since the creditor is not a party to the consignment agreement, it is not bound by it, and thus artwork could be seized as part of gallery inventory.[39]

ACAL also deals specifically with that situation. By making consigned work trust property and any sales proceeds trust funds, these are considered to be held in statutory trust, and thus cannot become property of the gallery nor subjected or subordinated to any claims, liens or security interests of gallery creditors.[40]

To better protect artists’ interests, a consignment agreement should make clear that ownership of the works remains with the artist for the duration of the consignment period, and that title shall only pass when the work has been paid for in full.[41] The agreement should also authorize the artist to file a Form UCC-1 Financing Statement, which states the artist’s secured interest in the works being consigned.[42]

Conclusion

The end of a relationship as close as the artist-gallery one is already hard as it is. Taking a few legal precautions may help reduce its impacts for artists. As we conclude, we offer three tips for artists.

Have a written contract. Typically avoided in artist-gallery relationships, a contract will work to protect a party when the counterpart fails to keep what it promised. Contracts do not have to be lengthy or filled with legalese – a simple memorialisation of the terms agreed to, signed by the parties, is already a great starting point. Termination provisions will be particularly important in the event of a gallery closure, and “should outline how a final accounting is done and how any unsold works are to be handled, including who bears what expenses.”[43]

Investment advice tells us it is better not to put all eggs in one basket, and the same might hold true for gallery representation. Non-exclusive representation (i.e. being represented by more than one gallery at the same time) can be a great way to minimize risks associated with gallery closure. If proceeding this way, the parties should agree in advance on how to determine what priority, if any, the gallery has in selecting and obtaining access to works for consignment.[44]

Finally, litigation is expensive, time-consuming, and can permanently damage relationships. Mediation may be a good, cost-effective alternative for solving disputes with galleries. Mediation is a dispute resolution method where the parties will attempt to reach a commonly satisfactory solution with the facilitation of an unbiased professional. Unlike judges, parties are not bound by remedies provided for in law, and mediation may elicit creative solutions that not only resolve the dispute but also work to preserve the parties’ relationship.

* * *

Disclaimer: the information provided in this article addresses legal issues from a New York-state law only and is not intended as legal advice, nor should it be construed so. Please consult a lawyer if seeking advice on a particular situation – Center for Art Law’s Artist-Dealer Relationships Clinic is a great way to get a first opinion.

 

About the Author:

Carla Frade is Center for Art Law’s 2024-2025 Judith Bresler Fellow, where she coordinates its Visual Artists Legal Clinics and contributes to legal research projects. She holds a Master of Laws from New York University and a Masters in Intellectual Property from University of Brasilia (Brazil). Carla is also a seasoned researcher, having published in leading journals in Brazil and been awarded in national and international competitions.

 

References:

  1. Clare McAndrew, The New York Art Market Report (2020), https://nyartmarket.independenthq.com/. ↑
  2. Annie Armstrong, A Hard Look at the Tumultuous New York Gallery Scene, as Dealers Shutter and Move, Artnet (May 31, 2024), https://news.artnet.com/market/a-hard-look-at-the-tumultuous-new-york-gallery-scene-as-dealers-shutter-and-move-2494448 ↑
  3. Denny Gallery (@denny_gallery), Instagram (Oct. 5, 2023), https://www.instagram.com/p/CyB97Crr_dM/. ↑
  4. JTT (@jtt_nyc), Instagram (Aug. 3, 2023), https://www.instagram.com/p/CvfrF6wRTNB/ ↑
  5. Downtown New York’s Simone Subal Gallery Closes, Artforum (Jun. 7, 2024), https://www.artforum.com/news/downtown-new-yorks-simone-subal-gallery-closure-555495/; Simone Subal Gallery (@simonesubalgallery), Instagram (Jun. 6, 2024), https://www.instagram.com/reel/C74AtPUsPkl/. ↑
  6. Alex Greenberger, Jack Hanley Gallery Closes After 37 Years in Business, ARTnews (Dec. 17, 2024), https://www.artnews.com/art-news/news/jack-hanley-gallery-closes-1234728063/. ↑
  7. Sarah Douglas, Malin Gallery Closes in New York and Aspen Amid Allegations of Unreceived Payments, ARTnews (Aug. 9, 2023), https://www.artnews.com/art-news/news/malin-gallery-closes-unreceived-payments-allegations-1234676758/. ↑
  8. Alex Greenberger, Foxy Production, Which Spurred Sterling Ruby and Others to Fame, to Close Gallery After 20 Years, ARTnews (Sep. 18, 2023), https://www.artnews.com/art-news/news/foxy-production-which-spurred-sterling-ruby-and-others-to-fame-to-close-gallery-after-20-years-1234679733/. ↑
  9. New York Gallery Queer Thoughts to Shutter Permanently, Artforum (Sep. 26, 2023), https://www.artforum.com/news/new-york-gallery-queer-thoughts-shutter-permanently-512893/. ↑
  10. Marlborough Gallery to Cease Operations After Nearly 80 Years, Artforum (Apr. 4, 2024), https://www.artforum.com/news/marlborough-gallery-cease-operations-after-nearly-80-years-551892/ ↑
  11. Helena Anrather Gallery to Shutter in New York, Artforum (Mar. 15, 2024), https://www.artforum.com/news/helena-anrather-gallery-shutters-in-new-york-550808/. ↑
  12. New York’s Deli Gallery is Closing, Artforum (Sep. 17, 2024), https://www.artforum.com/news/new-yorks-deli-gallery-closing-559332/ ↑
  13. Lucy Mitchell-Innes and David Nash, News from Mitchell-Innes & Nash, Mitchell-Innes & Nash (Jun. 2024), https://www.miandn.com/news/news-from-mitchell-innes-nash ↑
  14. Maya Pontone, What’s Behind the Recent Wave of New York Gallery Closures?, Hyperallergic (Apr. 25, 2024), https://hyperallergic.com/906097/behind-the-recent-wave-of-new-york-gallery-closures/ ↑
  15. Maximilíano Durón, As Dealers Close Up Shop Around Them, Two New York Galleries Look for a New Collaborative Model, ARTnews (Feb. 6, 2025), https://www.artnews.com/art-news/market/instituto-de-vision-proxyco-gallery-collaborative-model-1234731828. ↑
  16. Julia Halperin, How to Start a Gallery, The New York Times (Sep. 27, 2023), https://www.nytimes.com/2023/09/27/t-magazine/starting-galleries-art-dealers.html. ↑
  17. Id. ↑
  18. Daniel Grant, The Impact of Art Gallery Closures on Artists and Collectors, Observer (Apr. 06, 2024), https://observer.com/2024/04/art-galleries-closing-marlborough-gallery/ ↑
  19. Arun Kakar, 5 Key Takeaways from Art Basel and UBS’s Report “The Art Market 2024”, Artsy (Mar. 13, 2024), https://www.artsy.net/article/artsy-editorial-5-key-takeaways-art-basel-ubss-report-the-art-market-2024. ↑
  20. Sara E. (comment), The Art Market: My Predictions for 2025, John Russo (@thejohnrusso), LinkedIn (Jan. 6, 2025), https://www.linkedin.com/pulse/art-market-my-predictions-2025-john-russo-l3wmc/ comment by Sara E. ↑
  21. Arts Participation Patterns in 2022: Highlights from the Survey of Public Participation in the Arts, National Endowment for the Arts (Oct. 2023), https://www.arts.gov/sites/default/files/2022-SPPA-final.pdf, at 6. ↑
  22. Zachary Small, A Sharp Downturn in the Art Market, The New York Times (Aug. 18, 2024), https://www.nytimes.com/2024/08/18/briefing/art-market-downturn.html. ↑
  23. Carlie Porterfield, New York gallery closures are leaving artists to fend for themselves, The Art Newspaper (Sep. 24, 2024), https://www.theartnewspaper.com/2024/09/24/new-york-gallery-closures-leave-artists-fending-for-themselves. ↑
  24. Art Industry Trends 2024, Artsy (2024), https://pages.artsy.net/rs/609-FDY-207/images/Art%20Industry%20Trends%202024%20(1).pdf?version=0, at 1 and 4. ↑
  25. Julia Halperin, How to Start a Gallery, The New York Times (Sep. 27, 2023), https://www.nytimes.com/2023/09/27/t-magazine/starting-galleries-art-dealers.html. ↑
  26. Maya Pontone, What’s Behind the Recent Wave of New York Gallery Closures?, Hyperallergic (Apr. 25, 2024), https://hyperallergic.com/906097/behind-the-recent-wave-of-new-york-gallery-closures/ ↑
  27. Julia Halperin, How to Start a Gallery, The New York Times (Sep. 27, 2023), https://www.nytimes.com/2023/09/27/t-magazine/starting-galleries-art-dealers.html. ↑
  28. Id. ↑
  29. Scotti Hill, It Takes Two to Tango: The Importance of Artist-Gallery Contracts, Center for Art Law (Aug. 15, 2016), https://itsartlaw.org/2016/08/15/it-takes-two-to-tango-the-importance-of-artist-gallery-contracts/. ↑
  30. Id. ↑
  31. Id. ↑
  32. Id.; Judd Grossman and Michael Straus, Protecting Artists and Galleries in the Wake of Hurricane Sandy: A Checklist for Artist-Gallery Contracts, The Brooklyn Rail (Oct. 2013), https://brooklynrail.org/2013/10/art/protecting-artists-and-galleries-in-the-wake-of-hurricane-sandy-a-checklist-for-artist-gallery-contracts/. ↑
  33. Judd Grossman and Michael Straus, Protecting Artists and Galleries in the Wake of Hurricane Sandy: A Checklist for Artist-Gallery Contracts, The Brooklyn Rail (Oct. 2013), https://brooklynrail.org/2013/10/art/protecting-artists-and-galleries-in-the-wake-of-hurricane-sandy-a-checklist-for-artist-gallery-contracts/. ↑
  34. Scotti Hill, It Takes Two to Tango: The Importance of Artist-Gallery Contracts, Center for Art Law (Aug. 15, 2016), https://itsartlaw.org/2016/08/15/it-takes-two-to-tango-the-importance-of-artist-gallery-contracts/. ↑
  35. Judd Grossman and Michael Straus, Protecting Artists and Galleries in the Wake of Hurricane Sandy: A Checklist for Artist-Gallery Contracts, The Brooklyn Rail (Oct. 2013), https://brooklynrail.org/2013/10/art/protecting-artists-and-galleries-in-the-wake-of-hurricane-sandy-a-checklist-for-artist-gallery-contracts/. ↑
  36. Clare McAndrew, The New York Art Market Report (2020), https://nyartmarket.independenthq.com/. ↑
  37. Carlie Porterfield, New York gallery closures are leaving artists to fend for themselves, The Art Newspaper (Sep. 24, 2024), https://www.theartnewspaper.com/2024/09/24/new-york-gallery-closures-leave-artists-fending-for-themselves. ↑
  38. Scotti Hill, It Takes Two to Tango: The Importance of Artist-Gallery Contracts, Center for Art Law (Aug. 15, 2016), https://itsartlaw.org/2016/08/15/it-takes-two-to-tango-the-importance-of-artist-gallery-contracts/. ↑
  39. Id. ↑
  40. N.Y. Arts and Cult. Aff. Law §12(1)(a), subsections (ii), (iii) and (v). ↑
  41. Judd Grossman and Michael Straus, Protecting Artists and Galleries in the Wake of Hurricane Sandy: A Checklist for Artist-Gallery Contracts, The Brooklyn Rail (Oct. 2013), https://brooklynrail.org/2013/10/art/protecting-artists-and-galleries-in-the-wake-of-hurricane-sandy-a-checklist-for-artist-gallery-contracts/. ↑
  42. Id. ↑
  43. Id. ↑
  44. Id. ↑

Disclaimer: This article is for educational purposes only and is not meant to provide legal advice. Readers should not construe or rely on any comment or statement in this article as legal advice. For legal advice, readers should seek a consultation with an attorney.

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