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Facility report

A standard questionnaire the borrower completes for the lender before an art loan: building, security, guarding, climate, fire detection, handling. It underpins both the loan decision and the nail to nail underwriting.

Definition

Before lending a painting to an exhibition, the lender's registrar asks the borrower for a facility report, and reads it line by line. Two templates dominate: the General Facility Report of the American Alliance of Museums, drafted by American registrars, and the Standard Facility Report of the UK Registrars Group in Britain. The document describes the building (construction, age, roof, flood exposure), security (alarms, CCTV, access control, day and night guarding, police response time), the climate of galleries and storage (temperature and relative humidity, with the ranges recorded over the year), lighting, fire detection and suppression, loading docks and handling, and the insurance in place. The lender compares it with its own requirements, often 50 percent relative humidity plus or minus 5 points and about twenty degrees Celsius, and refuses, or sets conditions, when the readings fall outside the range. For the underwriter of the nail to nail policy, the report is the main underwriting document on the exhibition venue, and it binds the borrower: an inaccurate statement about guarding or fire detection can end up in the file after a loss. Its limit lies in being self-declared. Nothing forces the borrower to say its climate loggers have been down for a month, and insurers of major exhibitions often send a loss control engineer to visit the venue before setting their line. State indemnity schemes for exhibitions require a report of this kind as well, reviewed by the public body that carries the indemnity. Not to be confused with the condition report, which describes the work itself, its cracks and old restorations, at each stage of the loan.

Its 5 cross-references, woven across the glossary's 18 categories
Facility report: Special risks glossary illustration, AlgoPolis
Example

Textbook case: a museum asks to borrow twelve works with a total agreed value of 80 million euros. The lender requires 50 percent relative humidity, plus or minus 5 points. The facility report shows summer readings rising to 62 percent in the planned gallery, 7 points above the upper bound of 55 percent. The lender makes its consent conditional on dehumidifiers and weekly readings. The nail to nail insurer taking a 25 percent line carries 20 million euros on that single venue for the whole exhibition.

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Also known as

facility report, standard facility report, general facility report, UK Registrars Group facility report

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