BILL NUMBER: SB 212 AMENDED
BILL TEXT
AMENDED IN SENATE MARCH 29, 2011
INTRODUCED BY Senator De León
FEBRUARY 8, 2011
An act to amend Section 21201.5 of, and to add Section
21201.6 to the Business and Professions to,
the Finan cial Code, relating to pawnbrokers.
LEGISLATIVE COUNSEL'S DIGEST
SB 212, as amended, De León. Pawnbrokers.
Existing law regulates the sale and redemption of pledged property
by pawnbrokers. Existing law requires every loan made by a
pawnbroker, for which goods are received in pledge as security, to be
evidenced by a written contract and requires a copy of the contract
to be furnished to the pledgor. Existing law authorizes a pledgor and
a pawnbroker to agree to a new loan to take effect upon or at any
time after the expiration of the loan period stated in the original
contract furnished to the pledgor, requires the pledgor to pay in
cash or another form acceptable to the pawnbroker all of the charges
and interest due under the original loan, and requires the remaining
unpaid balance of the actual amount borrowed under the original loan
to be debited to the new loan on which the same article or articles
are pledged. A violation of these provisions under circumstances
where a person knows or should have known that a violation was being
committed is a crime.
This bill would instead authorize a pledgor and pawnbroker to
agree to a replacement loan before title to pledged property has
transferred, would establish that a replacement loan is a new loan
subject to specified fees, and would authorize the payment of charges
and fees for a loan that is being replaced to be made in person or
through mail or wire transfer. The bill would provide that the
signature of the pledgor is not required for these new
replacement loans if the pledgor remits payment
of fees and charges due under the original loan
contract being replaced by mail or proxy and certain other
conditions are satisfied. The bill would require the signature
of the pledgor and the pledgor's physical presence for a replacement
loan that is greater that the principal amount of the loan being
replaced or if the terms of the replacement loan are different than
the terms of the loan being replaced. The bill would require a
pawnbroker to return a pledgor's proposed payment in the same manner
it was provided to the pawnbroker if the pawnbroker rejects the
payment made by mail or other method.
Because a knowing violation of these provisions would be a crime,
this bill would impose a state-mandated local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Section 21201.5 of the
Financial Code is amended to read:
21201.5. A pledgor may request, and a pawnbroker may consent to,
a new replacement loan to take effect
upon or at any time after the expiration of the loan period stated in
the original loan contract delivered to the pledgor under
loan contract being replaced, but in no event after
title to the pledged article transfers to the pawnbroker pursuant to
Section 21201. The All of the following
shall apply to a replacement loan made pursuant to this section:
(a) The loan shall be deemed to be a new loan pursuant to this
chapter subject to loan origination fees, storage fees, and other
fees authorized under this chapter. All other terms of the
replacement loan shall be in compliance with the requirements of this
chapter.
(b) To obtain a replacement loan, the
pledgor shall pay in cash or another form acceptable to the
pawnbroker all of the charges and interest due under the
original loan , and the to be
replaced. Payment of charges and interest may be made by the pledgor
in person, through personal delivery by a representative of the
pledgor, through any mail service, or by wire transfer, provided that
the form of payment is acceptable to the pawnbroker. If insufficient
payment is rendered by the pledgor or is rendered in a form
unacceptable to the pawnbroker, the pawnbroker shall return the
payment in the manner that it was delivered by the pledgor and the
pawnbroker shall be under no obligation to enter into the replacement
loan.
(c) The remaining unpaid balance
of the actual amount borrowed under the
original loan being replaced shall be debited to
the new replacement loan on which the
same article or articles are pledged. The loan to which the
debit is applied shall be processed as a new loan and shall be deemed
to be a new loan subject to loan origination fees, storage fees, and
other fees permitted by this chapter, when applicable. The
new loan contract required by
to be provided for the replacement loan under Section
21201 shall disclose the amount of the original
loan being replaced that is debited to the new
replacement loan , and the change in loan
amount, if any, between the replacement loan and the loan
being replaced .
(d) If the pledgor is personally present, the replacement loan
contract shall be provided to the pledgor at the time the replacement
loan is made. If the pledgor is not physically present at the time
the replacement loan is made, the pawnbroker shall mail the
replacement loan contract to the pledgor at the pledgor's last known
address, within 10 days of making the loan, by a means that allows
the pawnbroker to obtain verification of mailing or delivery of the
contract.
SECTION 1. SEC. 2. Section 21201.6
is added to the Financial Code, to read:
21201.6. (a) Notwithstanding any other provision of law
to the contrary Except as provided in subdivision (b)
, the signature of a pledgor shall not be required for any
new replacement loan contract entered
into pursuant to Section 21201.5 if the pledgor remits payment of the
fees and charges due under the original loan
contract being replaced by mail or by proxy, and all of
the following are satisfied:
(1) The pawnbroker accepts the payment and issues a new
replacement loan consistent with Section 21201.5
and this section.
(2) The pawnbroker issues a receipt, as set forth in Section
21204, to the pledgor either in the same manner in which the pledgor
transmitted the payment to the pawnbroker or as otherwise provided
under the terms of the original contract loan
contract being replaced .
(3) The new replacement loan
contract is in writing.
(4) The new replacement loan and its
fees and charges satisfy the requirements of Sections 21200 to
21201.4, inclusive, excepting Section 21200.7.
(5) For a loan of a bona fide principal amount of two thousand
five hundred dollars ($2,500) or more, the formula for calculating
the compensation due under the new
replacement loan is set forth in the original
loan contract being replaced or, if none is
stated, the compensation for the new
replacement loan shall be calculated by the same formula stated
in the original loan contract
contract being replaced. If the dollar amount of the replacement
loan is two thousand five hundred dollars ($2,500) or
less, the rates provided for in Sections 21200 and 21200.5 shall
apply.
(b) Notwithstanding any other provision of law to the contrary,
the physical presence of the pledgor shall not be required to enter
into a replacement loan pursuant to Section 21201.5. However, the
physical presence of the pledgor and his or her signature shall be
required to enter into a replacement loan if either of the following
applies:
(1) The principal amount of the replacement loan is greater than
the principal amount of the loan being replaced.
(2) The terms of the replacement loan
are different than the terms of the loan being replaced .
(b) An original
(c) A loan contract may be
renewed replaced under Section 21201.5
as many times as the pawnbroker and pledgor may agree, except that
all new replacement loans issued as a
result of the pledgor's payment by mail or by proxy shall comply with
the requirements of subdivision (a).
(c) If a pawnbroker rejects a pledgor's proposed payment made by
mail or other method, the pawnbroker shall promptly return the
pledgor's proposed payment in the same manner it was made to the
pawnbroker by the pledgor.
SEC. 2. SEC. 3. No reimbursement is
required by this act pursuant to Section 6 of Article XIII B of the
California Constitution because the only costs that may be incurred
by a local agency or school district will be incurred because this
act creates a new crime or infraction, eliminates a crime or
infraction, or changes the penalty for a crime or infraction, within
the meaning of Section 17556 of the Government Code, or changes the
definition of a crime within the meaning of Section 6 of Article XIII
B of the California Constitution.