By Averitt H.B. No. 1878
76R5221 WP-F
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 requiring administrative handling of disputes over lost or damaged
2-2 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) The commissioner may not approve[; and]
2-10 [(2) for] an application for:
2-11 (1) an original license to operate a pawnshop at a
2-12 facility that is not an existing licensed pawnshop at the time the
2-13 application is filed if the proposed facility is located within two
2-14 miles of a licensed pawnshop;
2-15 (2) the relocation of a licensed pawnshop to a
2-16 facility that is not an existing licensed pawnshop at the time the
2-17 application is filed and that is located within one mile of a
2-18 licensed pawnshop; and
2-19 (3) the relocation of a licensed pawnshop if at the
2-20 time the application is filed the pawnshop has not been in
2-21 operation at its current location for at least three years, and the
2-22 facility where the pawnshop is to be relocated is further than one
2-23 mile from its existing location and closer than one mile to an
2-24 existing licensed operating pawnshop.
2-25 (c) Notwithstanding Subsection (b)(3), the commissioner may
2-26 approve an application for the relocation of a licensed pawnshop
2-27 that at the time the application is made has not been in operation
3-1 in its current location for at least three years if the necessity
3-2 for relocation was caused by circumstances beyond the applicant's
3-3 control.
3-4 (d) A determination of distance for purposes of this section
3-5 is based on a measurement taken from the front door of a facility
3-6 to the front door of the other facility. For a facility not in
3-7 existence at the time the application is filed, the location of the
3-8 front door of the proposed facility must be indicated on
3-9 architectural drawings or comparable professionally prepared
3-10 drawings depicting the facility and the entire boundary of the lot
3-11 or parcel of land to which the facility is to be attached [in or
3-12 the relocation of a pawnshop to a county with a population of at
3-13 least 250,000:]
3-14 [(A) there is a public need for the proposed
3-15 pawnshop; and]
3-16 [(B) the volume of business in the community in
3-17 which the pawnshop will conduct its business indicates a profitable
3-18 operation is probable].
3-19 SECTION 3. Section 371.258, Finance Code, is amended by
3-20 adding Subsection (c) to read as follows:
3-21 (c) The commissioner shall reinstate an expired pawnbroker
3-22 license if, not later than the 180th day after the date on which
3-23 the license expired, the pawnbroker pays the commissioner the
3-24 delinquent $100 annual fee plus a reinstatement fee of $900. After
3-25 a pawnbroker's license has expired, the commissioner shall send
3-26 notice of reinstatement rights to the delinquent pawnbroker every
3-27 30 days until the earlier of:
4-1 (1) the date on which the reinstatement payment is
4-2 received by the commissioner under this subsection; or
4-3 (2) the expiration of the period provided for
4-4 reinstatement under this subsection.
4-5 SECTION 4. Section 371.071, Finance Code, is amended to read
4-6 as follows:
4-7 Sec. 371.071. APPLICATION FOR [NOTICE OF] RELOCATION. [(a)]
4-8 A pawnbroker who wishes to move a pawnshop from the location
4-9 provided on the license must make application to the commissioner:
4-10 (1) [give notice to the commissioner] before the 30th
4-11 day preceding the date the pawnbroker moves if, at the time the
4-12 application is made, the pawnshop has been in operation in the
4-13 [new] location provided on the license for at least three years [is
4-14 not subject to Section 371.059(2)]; or
4-15 (2) [make application to the commissioner] before the
4-16 60th day preceding the date the pawnbroker moves if, at the time
4-17 the application is made, the pawnshop has been in operation in the
4-18 [new] location provided on the license for less than three years
4-19 [is subject to Section 371.059(2)].
4-20 [(b) When the commissioner receives a notice under
4-21 Subsection (a)(1), the commissioner shall amend the license
4-22 accordingly.]
4-23 SECTION 5. Section 371.072, Finance Code, is amended to read
4-24 as follows:
4-25 Sec. 371.072. NET ASSETS REQUIREMENT. (a) Except as
4-26 provided by Subsection (b) [this section], a pawnbroker shall
4-27 maintain net assets of at least $150,000 that are used or readily
5-1 available for use in the business of each pawnshop.
5-2 (b) A pawnbroker shall maintain net assets that are used or
5-3 readily available for use in the business of each pawnshop of at
5-4 least the amount required on the date on which the license was
5-5 originally issued to the pawnbroker. The net assets requirement of
5-6 this subsection remains in effect without regard to a change in
5-7 ownership or relocation of the license. [If a change in ownership
5-8 or a relocation from a municipality occurs, the net assets
5-9 requirement for a pawnbroker is an amount equal to the sum, rounded
5-10 to the next higher multiple of $5,000, of:]
5-11 [(1) the pawnbroker's outstanding loans on the date of
5-12 the change of ownership or relocation;]
5-13 [(2) the value of the pawnbroker's inventory on that
5-14 date; and]
5-15 [(3) an amount equal to five percent of the sum of the
5-16 amounts described by Subdivisions (1) and (2).]
5-17 [(c) The net assets requirement of Subsection (b) may not
5-18 be:]
5-19 [(1) less than the amount of net assets required
5-20 immediately before the date of the change of ownership or
5-21 relocation; or]
5-22 [(2) more than $150,000.]
5-23 [(d) Subject to Subsection (b), a pawnbroker shall maintain
5-24 for each pawnshop net assets that are used or readily available for
5-25 use in the business of the pawnshop of at least the amount required
5-26 on:]
5-27 [(1) August 31, 1981, if the pawnbroker held a license
6-1 on that date; or]
6-2 [(2) June 20, 1987, if the pawnbroker held a license
6-3 on that date but did not hold a license on August 31, 1981.]
6-4 (c) [(e)] Net assets must be represented by a capital
6-5 investment unencumbered by a lien or other encumbrance and subject
6-6 to a claim by a general creditor.
6-7 (d) [(f)] In this section, "capital investment" means:
6-8 (1) common or preferred shares and capital or earned
6-9 surplus as those terms are defined by the Texas Business
6-10 Corporation Act if the pawnbroker is a corporation; or
6-11 (2) a substantial equivalent of items described by
6-12 Subdivision (1), as determined by generally accepted accounting
6-13 principles, if the pawnbroker is not a corporation.
6-14 (e) [(g)] This section does not apply to a change in
6-15 ownership that is:
6-16 (1) a transaction involving a different owner who had
6-17 a significant family or business relationship with a prior owner
6-18 before the transaction;
6-19 (2) a transaction in which:
6-20 (A) only the number or proportionate ownership
6-21 of owners of a business changes; and
6-22 (B) an individual who was not an owner before
6-23 the transaction is not an owner after the transaction; or
6-24 (3) a change in ownership that occurs by testate or
6-25 intestate disposition.
6-26 SECTION 6. Section 371.101(a), Finance Code, is amended to
6-27 read as follows:
7-1 (a) An individual who begins employment at a pawnshop must
7-2 apply to the commissioner for a pawnshop employee license not later
7-3 than the 90th [30th] day after the date employment begins.
7-4 SECTION 7. Section 371.167(a), Finance Code, is amended to
7-5 read as follows:
7-6 (a) A pawnbroker shall replace pledged goods that are lost
7-7 or damaged while in the pawnbroker's possession with like kind
7-8 merchandise. The replacement is subject to approval by the
7-9 commissioner and is the pledgor's sole and exclusive remedy with
7-10 respect to the lost or damaged pledged goods.
7-11 SECTION 8. (a) This Act takes effect September 1, 1999.
7-12 The changes in law made by this Act to Sections 371.059 and
7-13 371.071, Finance Code, apply only to applications filed on or after
7-14 the effective date of this Act.
7-15 (b) An application filed before the effective date of this
7-16 Act is covered by the law in effect when the application was
7-17 submitted, and the former law is continued in effect for that
7-18 purpose.
7-19 SECTION 9. The importance of this legislation and the
7-20 crowded condition of the calendars in both houses create an
7-21 emergency and an imperative public necessity that the
7-22 constitutional rule requiring bills to be read on three several
7-23 days in each house be suspended, and this rule is hereby suspended.