Bill Text: CA SB300 | 2015-2016 | Regular Session | Enrolled

California Senate Bill 300 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Pawnbrokers: regulations.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Passed) 2015-10-01 - Chaptered by Secretary of State. Chapter 417, Statutes of 2015. [SB300 Detail]

Download: California-2015-SB300-Enrolled.html
BILL NUMBER: SB 300	ENROLLED
	BILL TEXT

	PASSED THE SENATE  SEPTEMBER 10, 2015
	PASSED THE ASSEMBLY  SEPTEMBER 8, 2015
	AMENDED IN ASSEMBLY  SEPTEMBER 4, 2015
	AMENDED IN ASSEMBLY  JULY 16, 2015
	AMENDED IN ASSEMBLY  JULY 2, 2015
	AMENDED IN ASSEMBLY  JUNE 11, 2015
	AMENDED IN SENATE  MAY 5, 2015
	AMENDED IN SENATE  APRIL 30, 2015
	AMENDED IN SENATE  MARCH 26, 2015

INTRODUCED BY   Senator Mendoza

                        FEBRUARY 23, 2015

   An act to amend Sections 21201 and 21201.5 of, and to add Section
21201.6 to, the Financial Code, relating to pawnbrokers.


	LEGISLATIVE COUNSEL'S DIGEST


   SB 300, Mendoza. Pawnbrokers: regulations.
   (1) Existing law regulates pawnbrokers and requires a written
contract for every loan by a pawnbroker for which goods are received
in pledge as security, as specified, and requires a copy of that
contract to be furnished to the borrower. Existing law requires the
contract to provide a 4-month loan period.
   This bill would, instead, specify that the contract be for a
minimum of 4 months.
   (2) Existing law requires a pawnbroker, within one month after the
loan period expires, to notify the borrower at his or her last known
address of the termination of the loan period, by a means for which
verification of mailing or delivery of the notification can be
provided by the pawnbroker, and provides for extending the right of
redemption for a period of 10 days from the date that notice is
mailed.
   This bill would instead require the pawnbroker to provide that
notification to the pledgor at his or her last known mailing or
electronic address, by a means for which verification of mailing or,
at the sole option of the pledgor, electronic transmission of the
notification can be provided by the pawnbroker, as specified. The
bill would provide that the electronic notice of the termination of
the loan period would be valid only if the pledgor has previously
responded to an electronic communication sent by the pawnbroker to
the pledgor's last known electronic address and would require the
pledgor to affirm the electronic address on file, as prescribed.
   (3) Existing law permits a pledgor and a pawnbroker to agree to a
new loan to become effective at the end of the loan period and
requires the new loan to be processed as a new loan subject to loan
origination, storage, and other fees as specified.
   This bill would permit a replacement loan to be issued at the
request of the pledgor with consent of the pawnbroker before the
expiration of the redemption period, to become effective on the date
it is issued, subject to specified requirements, including, but not
limited to, that the pledgor pay off all outstanding charges from the
prior loan then due before a replacement loan may be issued. The
bill would also permit the replacement loan to be issued
electronically, provided that the contract and transaction comply
with the Uniform Electronic Transactions Act and meet certain
disclosure requirements.


THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:

  SECTION 1.  It is the intent of the Legislature to permit
pawnbrokers to conduct business transactions by electronic means,
except when establishing an original loan. It is further the intent
of the Legislature to permit such transactions to be made in
conformity with the Uniform Electronic Transactions Act, as set forth
in Title 2.5 (commencing with Section 1633.1) of Part 2 of Division
3 of the Civil Code.
  SEC. 2.  Section 21201 of the Financial Code is amended to read:
   21201.  (a) Every loan made by a pawnbroker for which goods are
received in pledge as security shall be evidenced by a written
contract, a copy of which shall be furnished to the pledgor. The loan
contract shall provide a loan period that is a minimum of four
months, shall set forth the loan period and the date on which the
loan is due and payable, and shall clearly inform the pledgor of his
or her right to redeem the pledge during the loan period.
   (b) Every loan contract shall contain the following notice, in at
least 8-point boldface type and circumscribed by a box, immediately
above the space for the pledgor's signature:

   "You may redeem the property you have pledged at any time until
the close of business on ____  fill in date no less than four
months from date loan begins]. To redeem, you must pay the amount of
the loan and the applicable charges which have accrued through the
date on which you redeem."

   (c) Every pawnbroker shall retain in his or her possession every
article pledged to him or her for the duration of the loan period.
During such period the pledgor may redeem the articles upon payment
of the amount of the loan and the applicable charges. If the pledgor
and the pawnbroker agree in writing that the pawned property may be
stored off premises, following the request for redemption of the
loan, the pawnbroker shall return the pledged property to the pledgor
the next calendar day when both the pawnbroker's store and the
storage facility are open, not to exceed two business days.
   (d) If any pledged article is not redeemed during the loan period
as provided herein, and the pledgor and pawnbroker do not mutually
agree in writing to extend the loan period, the pawnbroker shall
notify the pledgor within one month after expiration of the loan
period. If the pawnbroker fails to notify the pledgor within one
month after the expiration of the loan period, the pawnbroker shall
not charge interest from the day after the expiration of the
one-month period. The pawnbroker shall notify the pledgor at his or
her last known mailing or electronic address of the termination of
the loan period, by a means for which verification of mailing or, at
the sole option of the pledgor, electronic transmission of the
notification can be provided by the pawnbroker, and extending the
right of redemption, during posted business hours, for a period of 10
days from date of mailing or electronic transmission of that notice.
Electronic notice of the termination of the loan period shall be
valid if the pledgor has previously responded to an electronic
communication sent by the pawnbroker to the pledgor's last known
electronic address provided by the pledgor. Upon the initiation of
each new or replacement loan, the pledgor shall affirm that the
current electronic address on file with the pawnbroker is valid. The
10-day notice shall state, in substantially the same format as the
following: "If the tenth day falls on a day when the pawnshop is
closed, the time period is extended to the next day that the pawnshop
is open."
   (e) The posted schedule of charges required pursuant to Section
21200.5 shall contain a notice informing the pledgor that if he or
she desires, the pawnbroker shall send the notice of termination of
the loan period by registered or certified mail with return receipt
requested, upon prepayment of the mailing costs.
   (f) If any pledged article is not redeemed within the 10-day
notice period, the pawnbroker shall become vested with all right,
title, and interest of the pledgor, or his or her assigns, to the
pledged article, to hold and dispose of as his or her own property.
Any other provision of law relating to the foreclosure and sale of
pledges shall not be applicable to any pledge the title to which is
transferred in accordance with this section. The pawnbroker shall not
sell any article of pledged property until he or she has become
vested with the title to that property pursuant to this section.
   (g) The sale of pledged property is a misdemeanor pursuant to
Section 21209.
  SEC. 3.  Section 21201.5 of the Financial Code is amended to read:
   21201.5.  (a) During the contractual loan period and any extension
thereof, but prior to the start of the 10-day grace period provided
in subdivision (d) of Section 21201, a pledgor may request, and a
pawnbroker may consent to, a replacement loan to take effect upon the
expiration of the loan period stated in the active loan contract
delivered to the pledgor under Section 21201 or this section.
   (b) Alternatively, a pledgor may request, and a pawnbroker may
consent to, a replacement loan during the 10-day grace period
provided in subdivision (d) of Section 21201. Any such replacement
loan shall become effective on the date it is issued.
   (c) All of the following shall apply to a replacement loan issued
pursuant to this section:
   (1) The loan shall be processed as, and deemed to be, a new loan
subject to all other fees and charges permitted by this chapter.
   (2) Before a replacement loan may be issued, the pledgor shall pay
off all outstanding charges from the prior loan then due, including
interest or any loan writing, storage, notification, or other fee
authorized in this chapter, in cash or another form acceptable to the
pawnbroker. The pledgor's payment may be delivered to the pawnbroker
by any method acceptable to the pawnbroker, including, but not
limited to, United States mail, private mail, a personal
representative, or electronic transfer. If insufficient payment is
tendered by the pledgor or is not tendered in cash or a form
acceptable to the pawnbroker, the pawnbroker shall, if commercially
reasonable, return the payment in the same manner that the payment
was delivered by the pledgor, or by another commercially reasonable
manner, within five business days, and shall include a statement
advising the pledgor the reason the payment was rejected. The
pawnbroker is under no obligation to enter into a replacement loan if
the amount is insufficient or the method of payment or form of
tender is not cash or acceptable to the pawnbroker.
   (3) The unpaid balance of the prior loan shall be debited to the
replacement loan on which the same article or articles have been
pledged. The replacement loan contract shall disclose the amount of
the prior loan that is debited and shall otherwise be consistent with
Section 21201.
   (4) If the pledgor requests a replacement loan in person or
electronically, the pledgor's consent to the terms of the replacement
loan shall be deemed given when he or she signs the written
replacement loan contract in person or electronically in conformity
with Section 21201.6.
   (5) If the pledgor requests a replacement loan by mail or through
a personal representative, the pledgor's consent to the terms of the
replacement loan shall be deemed given when all required charges from
the prior loan then due are paid in a form acceptable to the
pawnbroker. The principal amount of a replacement loan requested by
mail or through a personal representative shall not exceed the
principal amount of the prior loan.
   (6) The terms of the replacement loan shall be consistent with
this chapter on the date the replacement loan is issued.
   (7) The replacement loan shall be evidenced by a written agreement
or electronic record. The pawnbroker shall mail or otherwise
transmit a copy of the written agreement or electronic record to the
pledgor within five business days following receipt of payment by
means for which verification of mailing or electronic transmittal can
be provided by the pawnbroker.
  SEC. 4.  Section 21201.6 is added to the Financial Code, to read:
   21201.6.  The requirement for a written contract signed by the
pledgor as set forth in Section 21201.5 may be met electronically if
all of the following conditions are satisfied:
   (a) The contract and transaction comply with the provisions of the
Uniform Electronic Transactions Act, as set forth in Title 2.5
(commencing with Section 1633.1) of Part 2 of Division 3 of the Civil
Code, as may be applicable at the time that the loan is entered into
between the pawnbroker and the pledgor.
   (b) Any written disclosures specified in this chapter to be set
forth in a specified minimum type size are conspicuously presented to
the pledgor prior to his or her execution of the electronic
contract.
   (c) The pawnbroker makes one of the following disclosures:
   (1) If the principal loan amount is below two thousand five
hundred dollars ($2,500), the pawnbroker discloses the maximum
compensation due a pawnbroker as set forth in Section 21200.7 prior
to the pledgor's execution of the electronic contract.
   (2) If the principal loan amount is two thousand five hundred
dollars ($2,500) or more, the pawnbroker discloses the provisions of
Sections 21051 and 22054 prior to the pledgor's execution of the
electronic contract.