By: Harris S.B. No. 1813
Line and page numbers may not match official copy.
Bill not drafted by TLC or Senate E&E.
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the regulation of pawnbrokers and pawnshop employees.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Section 371.002, Finance Code, is amended to read
1-4 as follows:
1-5 Sec. 371.002. Purposes. The purposes of this chapter are
1-6 to:
1-7 (1) prevent fraud, unfair practices, discrimination,
1-8 imposition, and abuse of state residents;
1-9 (2) exercise the state's police power to ensure a
1-10 sound system of making pawn loans and transfers of personal
1-11 property by and through pawnshops;
1-12 (3) prevent transactions in stolen property and other
1-13 unlawful property transactions by licensing and regulating
1-14 pawnbrokers and pawnshop employees;
1-15 (4) provide for licensing and investigation fees;
1-16 (5) provide minimum capital requirements for
1-17 pawnbrokers;
1-18 (6) ensure financial responsibility to the state and
1-19 its residents and compliance with federal, state, and local law,
1-20 including rules and ordinances; [and]
1-21 (7) assist local governments in the exercise of their
1-22 police power; and
2-1 (8) prevent overburdening of court dockets by
2-2 providing an administrative procedure for disputes over lost or
2-3 damaged pledged goods.
2-4 SECTION 2. Section 371.059, Finance Code, is amended to read
2-5 as follows:
2-6 Sec. 371.059. Approval; Issuance of License. (a) Subject
2-7 to Subsection (b), the [The] commissioner shall approve the
2-8 application and issue a license if the commissioner finds that[:]
2-9 [(1)] the applicant is eligible for the license[;] and
2-10 (1) for an application for a new license which the
2-11 applicant proposes to use to operate a pawnshop at a facility
2-12 which, at the time of the filing of the application, is not an
2-13 existing licensed operating pawnshop, the facility is not within
2-14 two miles of an existing licensed operating pawnshop;
2-15 (2) for an application for the relocation of an
2-16 existing license which the licensee proposes to use to operate a
2-17 pawnshop at a facility which, at the time of the filing of the
2-18 application, is not an existing licensed operating pawnshop, the
2-19 facility is not within one mile of an existing licensed operating
2-20 pawnshop; or
2-21 (3) for an application for the relocation of an
2-22 existing license and the existing operating pawnshop to which it
2-23 relates, the pawnshop, at the time of the filing of the
2-24 application:
2-25 (A) has been in operation in its current
2-26 location by the licensee and the licensee's predecessors for a
3-1 period of at least three years; and
3-2 (B) is proposed to be relocated to a facility
3-3 that is either:
3-4 (i) less than one mile from its current
3-5 location; or
3-6 (ii) not within one mile of an existing
3-7 licensed operating pawnshop.
3-8 (b) Notwithstanding Subsection (a)(3), the commissioner may
3-9 approve an application for the relocation of a licensed operating
3-10 pawnshop that at the time the application is filed has not been in
3-11 operation in its current location for at least three years or needs
3-12 to relocate marginally more than one mile from its current location
3-13 if the necessity for relocation was caused by circumstances beyond
3-14 the applicant's control.
3-15 (c) A determination of distance for purposes of this section
3-16 is based on a measurement taken from the front door of a facility
3-17 to the front door of the other facility. For a facility not in
3-18 existance at the time the application is filed, the location of the
3-19 front door of the proposed facility must be indicated on
3-20 architectural drawings or comparable professionally prepared
3-21 drawings depicting the facility and the entire boundary of the lot
3-22 or parcel of land to which the facility is to be attached [(2) for
3-23 an application for an original license in or the relocation of a
3-24 pawnshop to a county with a population of at least 250,000.]
3-25 [(A) there is a public need for the proposed
3-26 pawnshop; and]
4-1 [(B) the volume of business in the community in
4-2 which the pawnshop will conduct its business indicates a profitable
4-3 operation is probable].
4-4 SECTION 3. Section 371.064(a), Finance Code, is amended to
4-5 read as follows:
4-6 (a) Not later than December 1, a pawnbroker shall pay
4-7 to the commissioner for each license held an annual fee of $125
4-8 [$100] for the year beginning the next January 1.
4-9 SECTION 4. Section 371.071, Finance Code, is amended to read
4-10 as follows:
4-11 Sec. 371.071. APPLICATION FOR [NOTICE OF] RELOCATION.
4-12 [(a)]A pawnbroker who wishes to move a pawnshop from the location
4-13 provided on the license must make application to the
4-14 commissioner([:]
4-15 [(1) give notice to the commissioner] before the 30th
4-16 day preceding the date the pawnbroker moves [the new location is
4-17 not subject to Section 371.059(2); or]
4-18 [(2) make application to the commissioner before the
4-19 60th day preceding the date the pawnbroker moves if the new
4-20 location is subject to Section 371.059(2)].
4-21 [(b) When the commissioner receives a notice under
4-22 Subjection (a)(1), the commissioner shall amend the license
4-23 accordingly.]
4-24 SECTION 5. Section 371.072, Finance Code, is amended to read
4-25 as follows:
4-26 Sec. 371.072. NET ASSETS REQUIREMENT. (a) Except as
5-1 provided by Subsection (b) [this section], a pawnbroker shall
5-2 maintain net assets of at least $150,000 that are used or readily
5-3 available for use in the business of each pawnshop.
5-4 (b) A pawnbroker who held a license under the Texas Pawnshop
5-5 Act prior to September 1, 1999 shall maintain net assets used or
5-6 readily available for use in the business for that existing license
5-7 in an amount of at least the net assets requirement associated with
5-8 the license as the requirement existed on August 31, 1999. The net
5-9 assets requirement of this subsection remains in effect without
5-10 regard to a change in ownership or relocation of the license. [If a
5-11 change in ownership or a relocation from a municipality occurs, the
5-12 net assets requirement for a pawnbroker is an amount equal to the
5-13 sum, rounded to the next higher multiple of $5,000, of:]
5-14 [(1) the pawnbroker's outstanding loans on the date of
5-15 the change of ownership or relocation;]
5-16 [(2) the value of the pawnbroker's inventory on that
5-17 date; and]
5-18 [(3) an amount equal to five percent of the sum of the
5-19 amounts described by Subdivisions (1) and (2).]
5-20 [(c) The net assets requirement of Subsection (b) may not
5-21 be:]
5-22 [(1) less than the amount of net assets required
5-23 immediately before the date of the change of ownership or
5-24 relocation; or]
5-25 [(2) more than $150,000.]
5-26 [(d) Subject to Subsection (b), a pawnbroker shall maintain
6-1 for each pawnshop net assets that are used or readily available for
6-2 use in the business of the pawnshop of at least the amount required
6-3 on:]
6-4 [(1) August 31, 1981, if the pawnbroker held a license
6-5 on that date; or]
6-6 [(2) June 20, 1987, if the pawnbroker held a license
6-7 on that date but did not hold a license on August 31, 1981.]
6-8 (c) [(e)] Net assets must be represented by a capital
6-9 investment unencumbered by a lien or other encumbrance and subject
6-10 to a claim by a general creditor.
6-11 (d) [(f)] In this section, "capital investment" means:
6-12 (1) common or preferred shares and capital or earned
6-13 surplus as those terms are defined by the Texas Business
6-14 Corporation Act if the pawnbroker is a corporation; or
6-15 (2) a substantial equivalent of items described by
6-16 Subdivision (1), as determined by generally accepted accounting
6-17 principles, if the pawnbroker is not a corporation.
6-18 (e) [(g)] Subsection (b) shall [This section does not] apply
6-19 to a change in ownership that is:
6-20 (1) a transaction involving a different owner who had
6-21 a significant family or business relationship with a prior owner
6-22 before the transaction;
6-23 (2) a transaction in which:
6-24 (A) only the number or proportionate ownership
6-25 of owners of a business changes; and
6-26 (B) an individual who was not an owner before
7-1 the transaction is not an owner after the transaction; or
7-2 (3) a change in ownership that occurs by testate or
7-3 intestate disposition.
7-4 SECTION 6. Section 371.101(a), Finance Code, is amended to
7-5 read as follows:
7-6 (a) An individual who begins employment at a pawnshop must
7-7 apply to the commissioner for a pawnshop employee license not later
7-8 than the 75th [30th] day after the date employment begins.
7-9 SECTION 7. Section 371.106(a), Finance Code, is amended to
7-10 read as follows:
7-11 (a) Not later than December 1, a pawnshop employee license
7-12 holder shall pay the commissioner an annual fee of $15 [$10] for
7-13 the year beginning the next January 1.
7-14 SECTION 8. Section 371.167(a), Finance Code, is amended to
7-15 read as follows:
7-16 (a) A pawnbroker shall replace pledged goods that are lost
7-17 or damaged while in the pawnbroker's possession with like kind
7-18 merchandise. The replacement is subject to approval by the
7-19 commissioner, and the pledgor must exhaust this administrative
7-20 remedy with respect to the lost or damaged pledged goods before
7-21 seeking redress in the courts.
7-22 SECTION 9. Section 371.258, Finance Code, is amended by
7-23 adding Subsection (c) to read as follows:
7-24 (c) The commissioner shall reinstate an expired pawnshop
7-25 license if, not later than the 180th day after the date on which
7-26 the license expired, the pawnbroker pays the commissioner the
8-1 delinquent $125 annual fee plus a reinstatement fee of $1,000.
8-2 After a pawnshop's license has expired, the commissioner shall send
8-3 notice of reinstatement rights to the delinquent pawnbroker via
8-4 certified mail promptly upon expiration of the license.
8-5 SECTION 10. (a) This Act takes effect September 1, 1999.
8-6 The changes in law made by this Act to Sections 371.059 and
8-7 371.071, Finance Code, apply only to applications filed on or after
8-8 the effective date of this Act.
8-9 (b) An application filed before the effective date of this
8-10 Act is covered by the law in effect when the application was
8-11 submitted, and the former law is continued in effect for that
8-12 purpose.
8-13 (c) The net assets requirement of an existing license on the
8-14 effective date of this Act remains in effect at the net assets
8-15 requirement that existed immediately before the effective date of
8-16 this Act and that law is continued in effect only for that purpose.
8-17 SECTION 11. This Act takes effect September 1, 1999.
8-18 SECTION 12. The importance of this legislation and the
8-19 crowded condition of the calendars in both houses create an
8-20 emergency and an imperative public necessity that the
8-21 constitutional rule requiring bills to be read on three several
8-22 days in each house be suspended, and this rule is hereby suspended.