76R10753 WP-F
By Averitt, Lewis of Tarrant, Gutierrez H.B. No. 1878
Substitute the following for H.B. No. 1878:
By Marchant C.S.H.B. No. 1878
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to the regulation of pawnbrokers and pawnshop employees.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Section 371.002, Finance Code, is amended to read
1-5 as follows:
1-6 Sec. 371.002. PURPOSES. The purposes of this chapter are
1-7 to:
1-8 (1) prevent fraud, unfair practices, discrimination,
1-9 imposition, and abuse of state residents;
1-10 (2) exercise the state's police power to ensure a
1-11 sound system of making pawn loans and transfers of personal
1-12 property by and through pawnshops;
1-13 (3) prevent transactions in stolen property and other
1-14 unlawful property transactions by licensing and regulating
1-15 pawnbrokers and pawnshop employees;
1-16 (4) provide for licensing and investigation fees;
1-17 (5) provide minimum capital requirements for
1-18 pawnbrokers;
1-19 (6) ensure financial responsibility to the state and
1-20 its residents and compliance with federal, state, and local law,
1-21 including rules and ordinances; [and]
1-22 (7) assist local governments in the exercise of their
1-23 police power; and
1-24 (8) prevent overburdening of court dockets by
2-1 providing an administrative procedure for the handling of disputes
2-2 over lost or damaged pledged goods.
2-3 SECTION 2. Section 371.059, Finance Code, is amended to read
2-4 as follows:
2-5 Sec. 371.059. APPROVAL; ISSUANCE OF LICENSE. (a) Subject
2-6 to Subsection (b), the [The] commissioner shall approve the
2-7 application and issue a license if the commissioner finds that[:]
2-8 [(1)] the applicant is eligible for the license.
2-9 (b) In a county with a population of 250,000 or more, the
2-10 commissioner may not approve[; and]
2-11 [(2) for] an application for:
2-12 (1) an original license to operate a pawnshop at a
2-13 facility that is not an existing licensed pawnshop at the time the
2-14 application is filed if the proposed facility is located within two
2-15 miles of a licensed pawnshop;
2-16 (2) the relocation of a licensed pawnshop to a
2-17 facility that is not an existing licensed pawnshop at the time the
2-18 application is filed and that is located within one mile of a
2-19 licensed pawnshop; and
2-20 (3) the relocation of a licensed pawnshop if at the
2-21 time the application is filed the pawnshop has not been in
2-22 operation at its current location for at least three years, and the
2-23 facility where the pawnshop is to be relocated is further than one
2-24 mile from its existing location and closer than one mile to an
2-25 existing licensed operating pawnshop.
2-26 (c) Notwithstanding Subsection (b)(3), the commissioner may
2-27 approve an application for the relocation of a licensed pawnshop
3-1 that needs to relocate marginally further than one mile from its
3-2 existing location or that at the time the application is made has
3-3 not been in operation in its current location for at least three
3-4 years if the necessity for relocation was caused by circumstances
3-5 beyond the applicant's control.
3-6 (d) A determination of distance for purposes of this section
3-7 is based on a measurement taken from the front door of a facility
3-8 to the front door of the other facility. For a facility not in
3-9 existence at the time the application is filed, the location of the
3-10 front door of the proposed facility must be indicated on
3-11 architectural drawings or comparable professionally prepared
3-12 drawings depicting the facility and the entire boundary of the lot
3-13 or parcel of land to which the facility is to be attached [in or
3-14 the relocation of a pawnshop to a county with a population of at
3-15 least 250,000:]
3-16 [(A) there is a public need for the proposed
3-17 pawnshop; and]
3-18 [(B) the volume of business in the community in
3-19 which the pawnshop will conduct its business indicates a profitable
3-20 operation is probable].
3-21 SECTION 3. Section 371.064(a), Finance Code, is amended to
3-22 read as follows:
3-23 (a) Not later than December 1, a pawnbroker shall pay to the
3-24 commissioner for each license held an annual fee of $125 [$100] for
3-25 the year beginning the next January 1.
3-26 SECTION 4. Section 371.071, Finance Code, is amended to read
3-27 as follows:
4-1 Sec. 371.071. APPLICATION FOR [NOTICE OF] RELOCATION. [(a)]
4-2 A pawnbroker who wishes to move a pawnshop from the location
4-3 provided on the license must make application to the commissioner[:]
4-4 [(1) give notice to the commissioner] before the 30th
4-5 day preceding the date the pawnbroker moves [if the new location is
4-6 not subject to Section 371.059(2); or]
4-7 [(2) make application to the commissioner before the
4-8 60th day preceding the date the pawnbroker moves if the new
4-9 location is subject to Section 371.059(2).]
4-10 [(b) When the commissioner receives a notice under
4-11 Subsection (a)(1), the commissioner shall amend the license
4-12 accordingly].
4-13 SECTION 5. Section 371.072, Finance Code, is amended to read
4-14 as follows:
4-15 Sec. 371.072. NET ASSETS REQUIREMENT. (a) Except as
4-16 provided by Subsection (b) [this section], a pawnbroker shall
4-17 maintain net assets of at least $150,000 that are used or readily
4-18 available for use in the business of each pawnshop.
4-19 (b) A pawnbroker who held a license under this chapter
4-20 before September 1, 1999, shall maintain net assets that are used
4-21 or readily available for use in the business for that existing
4-22 license of at least the amount required on August 31, 1999. The
4-23 net assets requirement of this subsection remains in effect without
4-24 regard to a change in ownership or relocation of the license [If a
4-25 change in ownership or a relocation from a municipality occurs, the
4-26 net assets requirement for a pawnbroker is an amount equal to the
4-27 sum, rounded to the next higher multiple of $5,000, of:]
5-1 [(1) the pawnbroker's outstanding loans on the date of
5-2 the change of ownership or relocation;]
5-3 [(2) the value of the pawnbroker's inventory on that
5-4 date; and]
5-5 [(3) an amount equal to five percent of the sum of the
5-6 amounts described by Subdivisions (1) and (2).]
5-7 [(c) The net assets requirement of Subsection (b) may not
5-8 be:]
5-9 [(1) less than the amount of net assets required
5-10 immediately before the date of the change of ownership or
5-11 relocation; or]
5-12 [(2) more than $150,000.]
5-13 [(d) Subject to Subsection (b), a pawnbroker shall maintain
5-14 for each pawnshop net assets that are used or readily available for
5-15 use in the business of the pawnshop of at least the amount required
5-16 on:]
5-17 [(1) August 31, 1981, if the pawnbroker held a license
5-18 on that date; or]
5-19 [(2) June 20, 1987, if the pawnbroker held a license
5-20 on that date but did not hold a license on August 31, 1981].
5-21 (c) [(e)] Net assets must be represented by a capital
5-22 investment unencumbered by a lien or other encumbrance and subject
5-23 to a claim by a general creditor.
5-24 (d) [(f)] In this section, "capital investment" means:
5-25 (1) common or preferred shares and capital or earned
5-26 surplus as those terms are defined by the Texas Business
5-27 Corporation Act if the pawnbroker is a corporation; or
6-1 (2) a substantial equivalent of items described by
6-2 Subdivision (1), as determined by generally accepted accounting
6-3 principles, if the pawnbroker is not a corporation.
6-4 (e) Subsection (b) applies [(g) This section does not
6-5 apply] to a change in ownership that is:
6-6 (1) a transaction involving a different owner who had
6-7 a significant family or business relationship with a prior owner
6-8 before the transaction;
6-9 (2) a transaction in which:
6-10 (A) only the number or proportionate ownership
6-11 of owners of a business changes; and
6-12 (B) an individual who was not an owner before
6-13 the transaction is not an owner after the transaction; or
6-14 (3) a change in ownership that occurs by testate or
6-15 intestate disposition.
6-16 SECTION 6. Section 371.101(a), Finance Code, is amended to
6-17 read as follows:
6-18 (a) An individual who begins employment at a pawnshop must
6-19 apply to the commissioner for a pawnshop employee license not later
6-20 than the 75th [30th] day after the date employment begins.
6-21 SECTION 7. Section 371.106(a), Finance Code, is amended to
6-22 read as follows:
6-23 (a) Not later than December 1, a pawnshop employee license
6-24 holder shall pay to the commissioner an annual fee of $15 [$10] for
6-25 the year beginning the next January 1.
6-26 SECTION 8. Section 371.167(a), Finance Code, is amended to
6-27 read as follows:
7-1 (a) A pawnbroker shall replace pledged goods that are lost
7-2 or damaged while in the pawnbroker's possession with like kind
7-3 merchandise. The replacement is subject to approval by the
7-4 commissioner and the pledgor must exhaust this administrative
7-5 remedy with respect to the lost or damaged pledged goods before
7-6 seeking a remedy in court.
7-7 SECTION 9. Section 371.258, Finance Code, is amended by
7-8 adding Subsection (c) to read as follows:
7-9 (c) The commissioner shall reinstate an expired pawnbroker
7-10 license if, not later than the 180th day after the date on which
7-11 the license expired, the pawnbroker pays the commissioner the
7-12 delinquent $125 annual fee plus a reinstatement fee of $1,000.
7-13 After a pawnbroker's license has expired, the commissioner shall
7-14 promptly send notice of reinstatement rights to the delinquent
7-15 pawnbroker by certified mail.
7-16 SECTION 10. (a) This Act takes effect September 1, 1999.
7-17 The changes in law made by this Act to Sections 371.059 and
7-18 371.071, Finance Code, apply only to applications filed on or after
7-19 the effective date of this Act.
7-20 (b) An application filed before the effective date of this
7-21 Act is covered by the law in effect when the application was
7-22 submitted, and the former law is continued in effect for that
7-23 purpose.
7-24 SECTION 11. The importance of this legislation and the
7-25 crowded condition of the calendars in both houses create an
7-26 emergency and an imperative public necessity that the
7-27 constitutional rule requiring bills to be read on three several
8-1 days in each house be suspended, and this rule is hereby suspended.