Texas Pawnshop License Requirements

Texas Statutes
Finance Code
Title 4. Regulation Of Interest, Loans, And Financed Transactions
Subtitle C. Pawnshops
Chapter 371. Pawnshops
Subchapter B. Pawnshop License

§ 371.051. Pawnshop License Required

A person may not engage in business as a pawnbroker unless the person holds a pawnshop license.

Cite as Tex. Fin. Code § 371.051

§ 371.052. Eligibility

(a)    To be eligible for a pawnshop license, an applicant must:
(1)    be of good moral character;
(2)    meet the net assets requirement of Section 371.072; and
(3)    show that:
(A)    the pawnshop will be operated lawfully and fairly under this chapter; and
(B)    the applicant or the applicant's owners and managers have the financial responsibility, experience, character, and general fitness to command the confidence of the public in the pawnshop's operations.
(b)    Subsection (a)(1) applies to each:
(1)    operator and legal or beneficial owner if the applicant is a business entity; and
(2)    officer, owner of at least five percent of the shares outstanding, and director if the applicant is a corporation.
(c)    For purposes of a disqualification under Chapter 53, Occupations Code, the commissioner is a licensing authority.

Cite as Tex. Fin. Code § 371.052

§ 371.053. Verification Of Applicant's Net Assets

If the commissioner cannot verify that an applicant meets the net assets requirement of Section 371.072, the commissioner may require a finding, including a current balance sheet, by an independent certified public accountant that:
(1)    the accountant has reviewed the applicant's books and records; and
(2)    the applicant meets the net assets requirement.

Cite as Tex. Fin. Code § 371.053

§ 371.054. License Application

(a)    This section applies to an application for:
(1)    an original pawnshop license;
(2)    relocation of a pawnshop; or
(3)    transfer of a pawnshop license and approval of a change in the ownership of a pawnshop.
(b)    An application must be made to the commissioner and must:
(1)    be under oath;
(2)    state:
(A)    the full name and place of residence of the applicant;
(B)    the full name and address of each member if the applicant is a partnership;
(C)    except as provided by Subsection (c), the full name and address of each officer, shareholder, and director if the applicant is a corporation;
(D)    the location where the business is to be conducted; and
(E)    other relevant information required by the commissioner; and
(3)    be accompanied by the fees and proof of insurance required by Section 371.055.
(c)    The full name and address of each shareholder is not required if the applicant is owned directly or beneficially by a person who:
(1)    is an issuer of securities who:
(A)    has a class of securities registered under Section 12 of the Securities Exchange Act of 1934 ( 15 U.S.C. Section 78l ); or

(B)    is required to file reports with the Securities and Exchange Commission by Section 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. Section 78o(d) ); and

(2)    has filed with the commissioner the information, documents, and reports required by the Securities Exchange Act of 1934 ( 15 U.S.C. Section 77bet seq.) to be filed by the issuer with the Securities and Exchange Commission.

Cite as Tex. Fin. Code § 371.054

§ 371.055. Fees; Proof Of Insurance

An applicant must submit with the application:
(1)    an investigation fee of:
(A)    $500 if the applicant does not hold a license; or
(B)    $250 if the application:
(i)    is for an additional license for a separate location; or
(ii)    involves substantially identical principals and owners of a licensed pawnshop at a separate location;
(2)    an annual fee in an amount determined as provided by Section 14.107; and
(3)    proof of general liability and fire insurance in a reasonable amount and form required by the commissioner.

Cite as Tex. Fin. Code § 371.055

§ 371.056. Bond

(a)    The commissioner may require that an applicant file a bond with the application. The bond must be:
(1)    satisfactory to the commissioner;
(2)    in the amount set by the commissioner not to exceed $5,000 for each license; and
(3)    issued by a surety qualified to do business in this state.
(b)    The aggregate liability of the surety may not exceed the amount of the bond.
(c)    The bond must be in favor of this state for the use of this state and the use of a person who has a cause of action under this chapter against the pawnbroker.
(d)    The bond must be conditioned on:
(1)    the pawnbroker's compliance with this chapter and rules adopted under this chapter; and
(2)    the payment of all amounts that become due to this state or to another person under this chapter.

Cite as Tex. Fin. Code § 371.056

§ 371.057. Investigation; Notice Of Application

(a)    On receipt of an application and the required fees, the commissioner shall:
(1)    conduct an investigation to determine whether to issue the license; and
(2)    give notice of the application to:
(A)    the Department of Public Safety of the State of Texas;
(B)    each local law enforcement agency in the county in which the business is to be conducted; and
(C)    each pawnbroker in the county in which the applicant pawnshop is to be located.
(b)    The notice to the department of public safety and local law enforcement agencies must state the name and address of each person required by Section 371.054 to be listed on the license application.
(c)    The commissioner shall give the department and local law enforcement agencies a reasonable time to respond with information concerning the listed persons or with any other relevant information.

Cite as Tex. Fin. Code § 371.057

§ 371.058. Public Hearing

(a)    On request, the commissioner shall conduct a public hearing before issuing a pawnshop license.
(b)    The commissioner shall give a pawnbroker that would be affected by the granting of an application for a pawnshop license an opportunity to appear, present evidence, and be heard for or against the application.

Cite as Tex. Fin. Code § 371.058

§ 371.059. Approval; Issuance Of License

(a)    Subject to Subsection (b), the commissioner shall approve the application and issue a license if the commissioner finds that the applicant is eligible for the license.
(b)    In a county with a population of 250,000 or more, the commissioner shall approve an application for:
(1)    an original license to operate a pawnshop at a facility that is not an existing licensed pawnshop at the time the application is filed if the proposed facility is not located within two miles of a licensed pawnshop;
(2)    the relocation of a licensed pawnshop to a facility that is not an existing licensed pawnshop at the time the application is filed if the facility where the pawnshop is to be relocated is not located within one mile of a licensed pawnshop; and
(3)    the relocation of a licensed pawnshop if at the time the application is filed the pawnshop has been in operation at its current location for at least three years, and the facility where the pawnshop is to be relocated is either within one mile of its existing location or, if in excess of one mile from its existing location, not within one mile of another existing operating pawnshop.
(c)    Notwithstanding Subsection (b)(3), the commissioner may approve an application for the relocation of a licensed pawnshop that needs to relocate marginally further than one mile from its existing location or that at the time the application is made has not been in operation in its current location for at least three years if the necessity for relocation was caused by circumstances beyond the applicant's control.
(d)    A determination of distance for purposes of this section is based on a measurement taken from the front door of a facility to the front door of the other facility. For a facility not in existence at the time the application is filed, the location of the front door of the proposed facility must be indicated on architectural drawings or comparable professionally prepared drawings depicting the facility and the entire boundary of the lot or parcel of land to which the facility is to be attached.

Cite as Tex. Fin. Code § 371.059

§ 371.060. Notice Of Denial; Hearing

(a)    If the commissioner does not make a finding described by Section 371.059, the commissioner shall notify the applicant.
(b)    An applicant who requests a hearing on the application not later than the 30th day after the date of notification under Subsection (a) is entitled to a hearing within 60 days after the date of the request.

Cite as Tex. Fin. Code § 371.060

§ 371.061. Period For Final Decision To Approve Or Deny

Unless the applicant and the commissioner agree in writing to a later date, the commissioner shall approve or deny the application before the 61st day after the later of the date on which:
(1)    the application is filed and the required fees are paid; or
(2)    a hearing on the application is completed.

Cite as Tex. Fin. Code § 371.061

§ 371.062. Disposition Of Fees On Denial Of Application

If the commissioner denies the application, the commissioner shall retain the investigation fee and shall return to the applicant the annual license fee submitted with the application.

Cite as Tex. Fin. Code § 371.062

§ 371.063. License Issued Before October 1, 1981

A license issued to a pawnshop before October 1, 1981, remains valid as long as the pawnbroker complies with this chapter.

Cite as Tex. Fin. Code § 371.063

§ 371.064. Annual License Fee; Expiration

(a)    Not later than December 1, a pawnbroker shall pay to the commissioner for each license held an annual fee in an amount determined as provided by Section 14.107 for the year beginning the next January 1.
(b)    If the annual fee for a license is not paid before the 16th day after the date on which written notice of delinquency of payment has been given to the pawnbroker by the commissioner, the license expires on the later of:
(1)    that day; or
(2)    December 31 of the last year for which an annual fee was paid.

Cite as Tex. Fin. Code § 371.064

§ 371.066. Temporary License

(a)    The commissioner may issue a temporary pawnshop license on receipt of an application:
(1)    to transfer a license from one person to another; or
(2)    for a license involving principals and owners that are substantially identical to those of a pawnshop in operation at the time of receipt of the application.
(b)    A temporary license is effective until a permanent license is issued or denied.

Cite as Tex. Fin. Code § 371.066

§ 371.067. Contents And Display Of License

(a)    A license must state:
(1)    the name of the pawnbroker; and
(2)    the address at which the business is to be conducted.
(b)    A pawnbroker shall display a license at the place of business provided on the license.

Cite as Tex. Fin. Code § 371.067

§ 371.068. Multiple Places Of Business

(a)    A separate pawnshop license is required for each place of business operated under this chapter.
(b)    The commissioner may issue more than one license to a person if the person complies with this chapter for each license.

Cite as Tex. Fin. Code § 371.068

§ 371.069. Change Of Ownership

(a)    An application for an original pawnshop license or the transfer of a pawnshop license is required if a change in direct or beneficial ownership of a licensed pawnshop occurs.
(b)    This section does not apply to a change in direct or beneficial ownership of a licensed pawnshop if the pawnshop is owned directly or beneficially by a person who:
(1)    is an issuer of securities who is described by Section 371.054(c)(1);
(2)    is described by Section 371.054(c)(2) and has submitted to the commissioner each filing required by Section 15(d) of the Securities Exchange Act of 1934 ( 15 U.S.C. Section 78o(d) ) and paid a filing fee of $100 with each; and

(3)    has filed information on officers and directors of the issuer or any licensed or intermediate subsidiary as required by Section 371.054 for officers and directors of a corporation.

Cite as Tex. Fin. Code § 371.069

§ 371.070. Transfer Or Assignment Of License

A pawnshop license may be transferred or assigned only with the approval of the commissioner.

Cite as Tex. Fin. Code § 371.070

§ 371.071. Application For Relocation

A pawnbroker who wishes to move a pawnshop from the location provided on the license must make application to the commissioner before the 30th day preceding the date the pawnbroker moves.

Cite as Tex. Fin. Code § 371.071

§ 371.072. Net Assets Requirement

(a)    Except as provided by Subsection (b), a pawnbroker shall maintain net assets of at least $150,000 that are used or readily available for use in the business of each pawnshop.
(b)    A pawnbroker who held a license under this chapter before September 1, 1999, shall maintain net assets that are used or readily available for use in the business for that existing license of at least the amount required on August 31, 1999. The net assets requirement of this subsection remains in effect without regard to a change in ownership or relocation of the license.
(c)    Net assets must be represented by a capital investment unencumbered by a lien or other encumbrance and subject to a claim by a general creditor.
(d)    [As amended by Acts 1999, 76th Leg., ch. 801, Sec. 4] Subject to Subsection (b), a pawnbroker shall maintain for each pawnshop net assets, as that term was defined at the time the license was issued, that are used or readily available for use in the business of the pawnshop of at least the amount required on:
(1)    August 31, 1981, if the pawnbroker held a license on that date; or
(2)    June 20, 1987, if the pawnbroker held a license on that date but did not hold a license on August 31, 1981.
(d)    [As amended by Acts 1999, 76th Leg., ch. 1399, Sec. 4]In this section, "capital investment" means:
(1)    common or preferred shares and capital or earned surplus as those terms are defined by the Texas Business Corporation Act if the pawnbroker is a corporation; or
(2)    a substantial equivalent of items described by Subdivision (1), as determined by generally accepted accounting principles, if the pawnbroker is not a corporation.
(e)    [As amended by Acts 1999, 76th Leg., ch. 801, Sec. 4] Subject to Subsection (d), net assets must be represented by a capital investment unencumbered by a lien or other encumbrance and subject to a claim by a general creditor.
(e)    [As amended by Acts 1999, 76th Leg., ch. 1399, Sec. 4] Subsection (b) applies to a change in ownership that is:
(1)    a transaction involving a different owner who had a significant family or business relationship with a prior owner before the transaction;
(2)    a transaction in which:
(A)    only the number or proportionate ownership of owners of a business changes; and
(B)    an individual who was not an owner before the transaction is not an owner after the transaction; or
(3)    a change in ownership that occurs by testate or intestate disposition.

Cite as Tex. Fin. Code § 371.072

§ 371.073. Appointment Of Agent

(a)    A pawnbroker shall maintain on file with the commissioner a written appointment of a resident of this state as the pawnbroker's agent for service of all judicial or other process or legal notice unless the pawnbroker has appointed an agent under another statute of this state.
(b)    If a pawnbroker does not comply with this section, service of all judicial or other process or legal notice may be made on the commissioner.

Cite as Tex. Fin. Code § 371.073