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                            CHAPTER 404-H.F.No. 2752 
                  An act relating to consumer protection; providing for 
                  the licensing and regulation of pawnbrokers; providing 
                  penalties; amending Minnesota Statutes 1994, sections 
                  471.924, subdivision 1; 471.925; and 471.927; 
                  proposing coding for new law as Minnesota Statutes, 
                  chapter 325J; repealing Minnesota Statutes 1994, 
                  section 609.81. 
                           PAWNBROKER REGULATION ACT 
           Section 1.  [325J.01] [DEFINITIONS.] 
           Subdivision 1.  [SCOPE.] As used in this chapter, the 
        following terms have the meanings given them unless the context 
        clearly indicates otherwise. 
        "Appropriate law enforcement agency" means the attorney general 
        of the state of Minnesota, the sheriff of each county in which a 
        pawnbroker maintains an office, or the police chief of the 
        municipality or law enforcement officers of the municipality in 
        which a pawnbroker maintains an office. 
           Subd. 3.  [MUNICIPALITY.] "Municipality" means any town, 
        home rule charter or statutory city, or county that elects to 
        regulate and license pawnbrokers within its jurisdiction 
        pursuant to local ordinance. 
           Subd. 4.  [PAWNBROKER.] (a) Except as provided in paragraph 
        (b), "pawnbroker" means a person engaged in whole or in part in 
        the business of lending money on the security of pledged goods 
        left in pawn, or in the business of purchasing tangible personal 
        property to be left in pawn on the condition that it may be 
        redeemed or repurchased by the seller for a fixed price within a 
        fixed period of time. 
           (b) The following are exempt from the definition of 
        "pawnbroker":  any bank regulated by the state of Minnesota, the 
        comptroller of the currency of the United States, the Federal 
        Deposit Insurance Corporation, the board of governors of the 
        Federal Reserve System or any other federal or state authority 
        and their affiliates; any bank or savings association whose 
        deposits or accounts are eligible for insurance by the Federal 
        Deposit Insurance Corporation or any successor to it and all 
        affiliates of those banks and savings associations; any state or 
        federally chartered credit union; and any industrial loan and 
        thrift company or regulated lender subject to licensing and 
        regulation by the department of commerce. 
           Subd. 5.  [PAWNSHOP.] "Pawnshop" means the location at 
        which or premises in which a pawnbroker regularly conducts 
           Subd. 6.  [PAWN TRANSACTION.] "Pawn transaction" means any 
        loan on the security of pledged goods or any purchase of pledged 
        goods on the condition that the pledged goods are left with the 
        pawnbroker and may be redeemed or repurchased by the seller for 
        a fixed price within a fixed period of time. 
           Subd. 7.  [PERSON.] "Person" means an individual, 
        partnership, corporation, limited liability company, joint 
        venture, trust, association, or any other legal entity, however 
           Subd. 8.  [PLEDGED GOODS.] "Pledged goods" means tangible 
        personal property other than choses in action, securities, bank 
        drafts, or printed evidence of indebtedness, that are purchased 
        by, deposited with, or otherwise actually delivered into the 
        possession of a pawnbroker in connection with a pawn transaction.
           Sec. 2.  [325J.02] [MUNICIPAL LICENSING AND REGULATION.] 
           (a) For the purpose of promoting the public health, safety, 
        morals, and welfare, a municipality may adopt an ordinance, 
        issue licenses to qualified applicants, and regulate pawn 
        transactions.  Ordinances must contain the minimum provisions of 
        this chapter. 
           (b) A person may not engage in business as a pawnbroker or 
        otherwise portray the person as a pawnbroker unless the person 
        has a valid license authorizing engagement in the business.  Any 
        pawn transaction made without benefit of a license is void.  
           (c) A separate license is required for each place of 
        business.  A municipality may issue more than one license to a 
        person if that person complies with this chapter for each 
           (d) Each license shall remain in full force and effect 
        until surrendered, suspended, revoked, or expired.  A license 
        may be suspended or revoked for failure to comply with the 
        municipality's ordinance. 
           (e) No expiration, revocation, suspension, or surrender of 
        any license shall impair or affect the obligation of any 
        preexisting lawful contract between the licensee and any pledgor.
           (f) The appropriate local law enforcement agency shall be 
        notified by the municipality of any licensee whose license has 
        expired or been surrendered, suspended, or revoked as provided 
        by this chapter. 
           Sec. 3.  [325J.03] [LICENSEE ELIGIBILITY.] 
           (a) To be eligible for or to maintain a pawnbroker license, 
        a person must operate lawfully and fairly within the purposes of 
        this chapter and the applicable local ordinance and: 
           (1) may not be a minor at the time that the application for 
        a pawnbroker's license is filed; 
           (2) may not have been convicted of any crime directly 
        related to the occupation licensed as prescribed by section 
        364.03, subdivision 2, unless the person has shown competent 
        evidence of sufficient rehabilitation and present fitness to 
        perform the duties of a licensee under this chapter as 
        prescribed by section 364.03, subdivision 3; and 
           (3) must be of good moral character or repute. 
           (b) Any change, directly or beneficially, in the ownership 
        of any licensed pawnshop shall require the application for a new 
        license and the new owner must satisfy all current eligibility 
           Sec. 4.  [325J.04] [PAWN TICKETS.] 
           Subdivision 1.  [ENTRIES OF PAWN TICKETS.] At the time of 
        making the pawn or purchase transaction, the pawnbroker shall 
        immediately and legibly record in English the following 
        information by using ink or other indelible medium on forms or 
        in a computerized record approved by the municipality: 
           (1) a complete and accurate description of the property, 
        including model and serial number if indicated on the property; 
           (2) the full name, residence address, residence telephone 
        number, and date of birth of the pledgor or seller; 
           (3) date and time of pawn or purchase transaction; 
           (4) the identification number and state of issue from one 
        of the following forms of identification of the seller or 
        pledgor:  current valid Minnesota driver's license; current 
        valid Minnesota identification card; or current valid photo 
        identification card issued by another state or a province of 
           (5) description of the pledgor including approximate 
        height, sex, and race; 
           (6) amount advanced or paid; 
           (7) the maturity date of the pawn transaction and the 
        amount due; and 
           (8) the monthly and annual interest rates, including all 
        pawn fees and charges. 
           Subd. 2.  [PRINTED PAWN TICKET.] The following shall be 
        printed on all pawn tickets: 
           (1) the statement that "Any personal property pledged to a 
        pawnbroker within this state is subject to sale or disposal when 
        there has been no payment made on the account for a period of 
        not less than 60 days past the date of the pawn transaction, 
        renewal, or extension; no further notice is necessary.  There is 
        no obligation for the pledgor to redeem pledged goods."; 
           (2) the statement that "The pledgor of this item attests 
        that it is not stolen, it has no liens or encumbrances against 
        it, and the pledgor has the right to sell or pawn the item."; 
           (3) the statement that "This item is redeemable only by the 
        pledgor to whom the receipt was issued, or any person identified 
        in a written and notarized authorization to redeem the property 
        identified in the receipt, or a person identified in writing by 
        the pledgor at the time of the initial transaction and signed by 
        the pledgor.  Written authorization for release of property to 
        persons other than the original pledgor must be maintained along 
        with the original transaction record."; and 
           (4) a blank line for the pledgor's signature. 
           Sec. 5.  [325J.05] [RECORDS; RETENTION.] 
           (a) The pledgor or seller shall sign a pawn ticket and 
        receive an exact copy of the pawn ticket. 
           (b) The pawnbroker shall maintain on the premises a record 
        of all transactions of pledged or purchased goods for a period 
        of three years.  These records shall be a correct copy of the 
        entries made of the pawn transactions.  A pawnbroker shall upon 
        request provide to the appropriate law enforcement agency a 
        complete record of pawn items. 
           Sec. 6.  [325J.06] [EFFECT OF NONREDEMPTION.] 
           (a) A pledgor shall have no obligation to redeem pledged 
        goods or make any payment on a pawn transaction.  Pledged goods 
        not redeemed within at least 60 days of the date of the pawn 
        transaction, renewal, or extension shall automatically be 
        forfeited to the pawnbroker, and qualified right, title, and 
        interest in and to the goods shall automatically vest in the 
           (b) The pawnbroker's right, title, and interest in the 
        pledged goods under paragraph (a) is qualified only by the 
        pledgor's right, while the pledged goods remain in possession of 
        the pawnbroker and not sold to a third party, to redeem the 
        goods by paying the loan plus fees and/or interest accrued up to 
        the date of redemption. 
           (c) A pawn transaction that involves holding only the title 
        to property is subject to chapter 168A or 336. 
           Sec. 7.  [325J.07] [PERMITTED CHARGES.] 
           (a) Notwithstanding any other statute, ordinance, rule, 
        regulation, or section 325J.13, a pawnbroker may contract for 
        and receive a pawnshop charge not to exceed three percent per 
        month of the principal amount advanced in the pawn transaction 
        plus a reasonable fee for storage and services.  A fee for 
        storage and services may not exceed $20 if the property is not 
        in the possession of the pawnbroker.  
           (b) The pawnshop charge allowed under paragraph (a) shall 
        be deemed earned, due, and owing as of the date of the pawn 
        transaction and a like sum shall be deemed earned, due, and 
        owing on the same day of the succeeding month.  However, if full 
        payment is made more than two weeks before the next succeeding 
        date the pawnbroker shall remit one-half of the pawnshop charge 
        for that month to the pledgor. 
           (c) Interest shall not be deducted in advance, nor shall 
        any loan be divided or split so as to yield greater interest or 
        fees than would be permitted upon a single, consolidated loan or 
        for otherwise evading any provisions of this section. 
           (d) Any interest, charge, or fees contracted for or 
        received, directly or indirectly, in excess of the amount 
        permitted under this section, shall be uncollectible and the 
        pawn transaction shall be void. 
           (e) A schedule of charges permitted by this section shall 
        be posted on the pawnshop premises in a place clearly visible to 
        the general public. 
           Sec. 8.  [325J.08] [RECORDS; PROHIBITIONS.] 
           A pawnbroker and any clerk, agent, or employee of a 
        pawnbroker shall not: 
           (1) make any false entry in the records of pawn 
           (2) falsify, obliterate, destroy, or remove from the place 
        of business the records, books, or accounts relating to the 
        licensee's pawn transactions; 
           (3) refuse to allow the appropriate law enforcement agency, 
        the attorney general, or any other duly authorized state or 
        federal law enforcement officer to inspect the pawn records or 
        any pawn goods in the person's possession during the ordinary 
        hours of business or other times acceptable to both parties; 
           (4) fail to maintain a record of each pawn transaction for 
        three years; 
           (5) accept a pledge or purchase property from a person 
        under the age of 18 years; 
           (6) make any agreement requiring the personal liability of 
        a pledgor or seller, or waiving any provision of this section, 
        or providing for a maturity date less than one month after the 
        date of the pawn transaction; 
           (7) fail to return pledged goods to a pledgor or seller, or 
        provide compensation as set forth in section 325J.09, upon 
        payment of the full amount due the pawnbroker unless either the 
        date of redemption is more than 60 days past the date of the 
        pawn transaction, renewal, or extension and the pawnbroker has 
        sold the pledged goods pursuant to section 325J.06, or the 
        pledged goods have been taken into custody by a court or a law 
        enforcement officer or agency; 
           (8) sell or lease, or agree to sell or lease, pledged or 
        purchased goods back to the pledgor or seller in the same, or a 
        related, transaction; 
           (9) sell or otherwise charge for insurance in connection 
        with a pawn transaction; or 
           (10) remove pledged goods from the pawnshop premises or 
        other storage place approved by a municipality at any time 
        before unredeemed, pledged goods are sold pursuant to section 
           Sec. 9.  [325J.09] [REDEMPTION; RISK OF LOSS.] 
           Any person to whom the receipt for pledged goods was 
        issued, or any person identified in a written and notarized 
        authorization to redeem the pledged goods identified in the 
        receipt, or any person identified in writing by the pledgor at 
        the time of the initial transaction and signed by the pledgor 
        shall be entitled to redeem or repurchase the pledged goods 
        described on the ticket.  In the event the goods are lost or 
        damaged while in possession of the pawnbroker, the pawnbroker 
        shall compensate the pledgor, in cash or replacement goods 
        acceptable to the pledgor, for the fair market value of the lost 
        or damaged goods.  Proof of compensation shall be a defense to 
        any prosecution or civil action. 
           Sec. 10.  [325J.095] [MOTOR VEHICLE TITLE PAWN 
           (a) In addition to the other requirements of this chapter, 
        a pawnbroker who holds a title to a motor vehicle as part of a 
        pawn transaction shall: 
           (1) be licensed as a used motor vehicle dealer under 
        section 168.27, and post such license on the pawnshop premises; 
           (2) verify that there are no liens or encumbrances against 
        the motor vehicle with the department of public safety; and 
           (3) verify that the pledgor has automobile insurance on the 
        motor vehicle as required by law. 
           (b) A pawnbroker may not sell a motor vehicle covered by a 
        pawn transaction until 90 days after recovery of the motor 
           Sec. 11.  [325J.10] [PAWNSHOP LOCATION.] 
           No pawnshop shall be located within ten driving miles of 
        any gambling casino.  No pawnshop, lawfully operating as of the 
        date of the enactment of this section, shall be required to 
        relocate or close as a result of this section. 
           Sec. 12.  [325J.11] [VIOLATION.] 
           A violation of this chapter by a pawnbroker or pledgor is a 
           Sec. 13.  [325J.12] [TRANSITION.] 
           (a) Pawnbrokers that are in business when a municipality 
        adopts an ordinance under this chapter must apply for a license 
        and pay the required fee within six months of adoption of the 
           (b) A county that has adopted an ordinance under Minnesota 
        Statutes 1994, sections 471.924 to 471.927, must conform the 
        ordinance to this chapter by August 1, 1997.  Pawnbrokers that 
        are in business when a municipality adopts a new ordinance under 
        this chapter must apply for a license and pay the required fee 
        within six months of the adoption of the new ordinance.  
           Sec. 14.  [325J.13] [ORDINANCES; CONSISTENCY.] 
           Nothing in this chapter preempts or supersedes any 
        ordinance adopted by a municipality that provides for more 
        restrictive regulation of pawnbrokers or pawn transactions. 
           Sec. 15.  Minnesota Statutes 1994, section 471.924, 
        subdivision 1, is amended to read: 
           Subdivision 1.  [AUTHORITY.] For the purpose of promoting 
        the health, safety, morals, and general welfare of its 
        residents, any county in the state may regulate the activities 
        of pawnbrokers, secondhand and junk dealers. 
           Sec. 16.  Minnesota Statutes 1994, section 471.925, is 
        amended to read: 
           471.925 [DEFINITIONS.] 
           For purposes of sections 471.924 to 471.929, the following 
        terms have the meanings given them: 
           (1) "pawnbroker" means a person who loans money on deposit 
        or pledge of personal property, or other valuable thing, or who 
        deals in the purchasing of personal property or other valuable 
        thing on condition of selling the same back again at a 
        stipulated price, or who loans money secured by chattel mortgage 
        or personal property, taking possession of the property or any 
        part thereof so mortgaged; and 
           (2) "secondhand goods" or "junk dealer" means a person 
        engaged in the business of buying secondhand goods of any kind, 
        including but not limited to coins, gold, silver, jewelry, 
        metals, guns, and wrecked or dismantled motor vehicles or motor 
        vehicles intended to be wrecked or dismantled, but not including 
        used goods and merchandise taken as part or full payment for new 
        goods and merchandise.  
           Sec. 17.  Minnesota Statutes 1994, section 471.927, is 
        amended to read: 
           The governing body of any municipality may continue to 
        exercise the authority to regulate pawnbrokers and secondhand or 
        junk dealers as provided by law, but may contract with the 
        county board of commissioners for administration and enforcement 
        of countywide regulations or ordinance provisions within the 
        borders of the municipality. 
           Sec. 18.  [REPEALER.] 
           Minnesota Statutes 1994, section 609.81, is repealed. 
           Presented to the governor March 29, 1996 
           Signed by the governor April 2, 1996, 10:24 a.m.

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Revisor of Statutes