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Ask The Lawyer

Posted by: tdt -

Are there certain rules that apply to
pawn shops that don’t apply to other stores? 

    Question:  I was curious about the two pawnshops that are now in Dalhart.  Are there certain rules that apply to pawn shops that don’t apply to other stores?  
    Answer:  Yes.  An entire section in the Texas Finance Code is dedicated to the formation, operation and maintenance of pawnshops within the State of Texas.  Operating a pawnshop is a heavily regulated endeavor and for good reason.  Pawnbrokers, or those who accept property as security for a loan, must meet several personal criteria before obtaining a license.  The law that regulates pawnshop businesses within Texas is meant to protect the consumer, protect the broker and minimize the possibility of dealing in stolen property.
    A person seeking to obtain a pawnbroker’s license must have “high moral turpitude.”  That means that they must possess a high degree of honesty and integrity.  They also must meet a minimum asset requirement, and the assets must be used to conduct the pawn business.  Even employees that work in a pawnshop receive a license so that everyone who deals with patrons and their property has an understanding of the many requirements of the business.
    Some regulations of a pawnshop include the hours that a pawnshop must be open.  Anyone operating a pawn business must be open at least four hours a day, and five days a week.  Pawnshops must also follow requirements about when not to be open for business, which include before 7:00 a.m. and after 9:00 p.m.  Other regulations include record keeping practices, a requirement to maintain general liability and fire insurance in a reasonable amount sufficient to protect pledged goods, including jewelry, at the pawnshop and a pawnbroker must also secure a bond in the amount, not to exceed $5,000.
    Additionally, pawnshops must have one or more alarm systems sufficient to detect and signal unauthorized entry, or the presence of an unauthorized person, to provide for the security of pledged goods; and a safe to provide for the security of pledged jewelry.  A myriad of regulations surround the actual pawn transactions, including whether or not an item or items are considered one transaction.  Further, the pawnbroker must complete pawn tickets on all transactions, which includes many required pieces of information about the person entering the transaction, the item pawned, the amount financed, the annual percentage rate and date of maturity of the loan.
    Many regulations exist regarding the safekeeping of pawned property, its return to its owner and what happens if property is damaged or lost.  A pawnbroker even has a duty not to accept a pledge or purchase property from a person under 18 years of age or transact business with a person believed to be under the influence of alcohol or drugs.
    Not all transactions that occur at a pawnshop result from a loan, and pawnbrokers must follow many regulations about the outright purchase of property, whether jewelry, a sewing machine or furniture.  And perhaps the most regulated action on the part of the pawnbroker deals with firearms, how they may be displayed, accepted and sold.
    This article is meant for informational purposes only and not as a substitute for sound legal advice.  Direct questions to Ask the Lawyer to or via the Facebook page for the Dalhart Texan.