Texas Rules for Pawnshops Operation

Administrative Regulations adopted in Texas dealing with Pawnshop licensing and operation.  

Texas Administrative Code
Title 7. BANKING AND SECURITIES (§§ 1.201 - 155.3)
Part 5. OFFICE OF CONSUMER CREDIT COMMISSIONER (§§ 82.1 - 90.706)
Chapter 85. PAWNSHOPS AND CRAFTED PRECIOUS METAL DEALERS (§§ 85.101 - 85.2002)
Subchapter A. RULES OF OPERATION FOR PAWNSHOPS (§§ 85.101 - 85.703)

Division 1. GENERAL PROVISIONS (§§ 85.101 - 85.104)
Division 2. PAWNSHOP LICENSE (§§ 85.201 - 85.212)
Division 3. PAWNSHOP EMPLOYEE LICENSE (§§ 85.301 - 85.308)
Division 4. OPERATION OF PAWNSHOPS (§§ 85.401 - 85.423)
Division 5. INSPECTIONS AND EXAMINATION (§§ 85.501 - 85.503)
Division 6. LICENSE REVOCATION, SUSPENSION, AND SURRENDER (§§ 85.601 - 85.608)
Division 7. ENFORCEMENT; PENALTIES (§§ 85.701 - 85.703)

Division 1. GENERAL PROVISIONS

§ 85.101. Purpose and Scope

(a) Purpose. The purpose of this chapter is to assist in the administration and enforcement of Texas Finance Code, Chapter 371, which may be cited as the Texas Pawnshop Act.

(b) Scope. This chapter applies to a person engaged in the business of:

(1) lending money on the security of pledged goods; or

(2) purchasing goods on condition that the goods may be redeemed or repurchased by the seller for a fixed price within a fixed period.

Source:
The provisions of this §85.101 adopted to be effective September 5, 1999, 24 TexReg 6712; amended to be effective June 7, 2010, 35 TexReg 3471

§ 85.102. Definitions

Words and terms used in this chapter that are defined in Texas Finance Code, Chapter 371, have the same meanings as defined in that chapter unless the context clearly indicates otherwise. The following words and terms, when used in this chapter, shall have the following meanings unless the context clearly indicates otherwise.

(1) Bank deposits--Cash on deposit in banks or in other federally insured depository institutions. The value of deposits will be reduced by any taxes or penalties that would be due and payable if the funds were withdrawn on the date of valuation.

(2) Book value--The dollar amount assigned to assets using generally accepted accounting principles (GAAP). In evaluating merchandise inventory, the lower of the cost or the market value of the asset method is generally used when determining book value.

(3) Commissioner--The Consumer Credit Commissioner of the State of Texas as defined in Chapter 14 of the Texas Finance Code.

(4) Facility--The physical space used or proposed for the use of the operation of a pawnshop.

(5) Law enforcement agency--An agency of government having jurisdiction over ensuring compliance with the criminal statutes where the pawnshop is physically located.

(6) Merchandise inventory--Tangible personal property held by a pawnbroker or applicant for immediate sale in the pawnshop or proposed pawnshop.

(7) Month--The period from a date in one month to the corresponding date in the succeeding month. If the succeeding month does not have a corresponding date, the month ends on the last day of the succeeding month.

(8) OCCC--The Office of Consumer Credit Commissioner of the State of Texas.

(9) Operator--A person or entity who manages the daily operations of a pawnshop. This term includes a party to a management agreement for oversight and supervision of the operations of the pawnshop on behalf of the owners of the pawnshop.

(10) Pawnbroker--A person who has an ownership interest in a pawnshop as shown in an application for a pawnshop license filed with the commissioner. When general duties and prohibitions are described, pawnbroker also includes a pawnshop employee unless the context indicates otherwise.

(11) Pledged goods--Tangible personal property held by a pawnbroker as collateral for a pawn loan and that has not become the property of the pawnbroker by a taking into inventory due to non-payment of the loan.

(12) Principal party--An adult individual with a substantial relationship to the proposed business of the applicant. The following individuals are principal parties:

(A) proprietors, including spouses with community property interest;

(B) general partners;

(C) officers of privately-held corporations, to include the chief executive officer or president, the chief operating officer or vice president of operations, the chief financial officer or treasurer, and those with substantial responsibility for lending operations or compliance with the Texas Pawnshop Act;

(D) directors of privately-held corporations;

(E) individuals associated with publicly-held corporations designated by the applicant as follows:

(i) officers as provided by subparagraph (C) of this paragraph (as if the corporation was privately-held); or

(ii) three officers or similar employees with significant involvement in the corporation's activities governed by the Texas Pawnshop Act. One of the persons designated must be responsible for assembling and providing the information required on behalf of the applicant and must sign the application for the applicant;

(F) voting members of a limited liability corporation;

(G) shareholders owning 5% or more of the outstanding voting stock;

(H) trustees and executors;

(I) operators; and

(J) individuals designated as a principal party where necessary to fairly assess the applicant's financial responsibility, experience, character, general fitness, and sufficiency to command the confidence of the public and warrant the belief that the business will be operated lawfully and fairly as required by the commissioner.

Source:
The provisions of this §85.102 adopted to be effective September 5, 1999, 24 TexReg 6712; amended to be effective October 1, 2000, 25 TexReg 9211; amended to be effective June 7, 2010, 35 TexReg 3471

§ 85.103. Attempted Evasion of Chapter

A person may not use any device, subterfuge, or pretense to evade the application of this chapter. A device, subterfuge, or pretense includes any transaction that in form may appear on its face to be something other than a pawn transaction, but in substance meets the definition of a pawn transaction as defined in the Texas Pawnshop Act, §371.003(8).

Source:
The provisions of this §85.103 adopted to be effective September 5, 1999, 24 TexReg 6712

§ 85.104. Renewal Dates of Licenses

(a) Licensing period and renewal due date. A pawnshop license and a pawnshop employee license are effective from July 1 through June 30 of each year. The annual fees for pawnshop licenses and pawnshop employee licenses are due on June 1 of each year for the following July 1 through June 30 term.

(b) Notice of delinquency. If a pawnshop or pawnshop employee does not pay the annual fees by June 1, a written notice of delinquency will be mailed by June 15. The notice of delinquency will be delivered as follows:

(1) for pawnshops, the notice will be mailed to the address of the corporate office on file for the pawnshop;

(2) for pawnshop employees, the notice will be mailed to the employee license holder through the corporate office on file for the licensed entity who employs the pawnshop employee.

(c) Expiration of license. A pawnshop license and a pawnshop employee license will expire on the later of June 30 of each year or the 16th day after the written notice of delinquency is given unless the annual fees for the following term have been paid. To be considered timely paid, the fees must be postmarked by June 30. June 30 is the end of the license term for each year.

Source:
The provisions of this §85.104 adopted to be effective June 7, 2010, 35 TexReg 3471

Division 2. PAWNSHOP LICENSE

§ 85.201. Engaging in Business

An application must be filed and approved before any person engages in the business of making pawn loans. The application and approval is required without regard to the rate of interest or pawn service charge contracted for, charged, or received, if any. An applicant is prohibited from advertising the opening of a new pawnshop prior to approval.

Source:
The provisions of this §85.201 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective June 7, 2010, 35 TexReg 3471

§ 85.202. Filing of New Application

(a) An application for issuance of a new pawnshop license must be submitted in a format prescribed by the commissioner at the date of filing and in accordance with the commissioner's instructions. The commissioner may accept the use of prescribed alternative formats in order to accept approved electronic submissions. Appropriate fees must be filed with the application, and the application must include the following:

(1) Required application information. All questions must be answered.

(A) Application for Pawnshop License.

(i) Location. A physical street address must be listed for the proposed location for which the applicant can show proof of ownership or an executed lease agreement. A post office box or a mail box location at a private mail-receiving service may not be used except for a physical location that does not receive general mail delivery. An application for a new license will not be accepted if the address or the full legal property description has not yet been determined or the application is for an inactive license.

(ii) Responsible person. The person responsible for the day-to-day operations of one or more of the applicant's proposed locations must be named. This person must be:

(I) an individual who has an ownership interest in the pawnshop license and is named on the application;

(II) a licensed pawnshop employee identified by license number; or

(III) an applicant for a pawnshop employee license with the date of application.

(iii) Signature(s). Electronic signatures will be accepted in a manner approved by the commissioner.

(I) If the applicant is a proprietor, each owner must sign.

(II) If the applicant is a partnership, each general partner must sign.

(III) If the applicant is a corporation, an authorized officer must sign.

(IV) If the applicant is a limited liability company, an authorized member or manager must sign.

(V) If the applicant is a trust or estate, the trustee or executor, as appropriate, must sign.

(B) Disclosure of Owners and Principal Parties.

(i) Proprietorships. The applicant must disclose who owns and who is responsible for operating the business. All community property interest must also be disclosed. If the business
interest is owned by a married individual as separate property, documentation establishing or confirming separate property status must be provided.

(ii) General partnerships. Each partner must be listed and the percentage of ownership stated. If a general partner is wholly or partially owned by a legal entity and not a natural person, a narrative or diagram must be included that lists the names and titles of all meeting the definition of "managerial official," as contained in Texas Business Organizations Code, § 1.002 , and a description of the ownership of each legal entity must be provided. General partnerships that register as limited liability partnerships should provide the same information as that required for general partnerships.

(iii) Limited partnerships. Each partner, general and limited, must be listed and the percentage of ownership stated.

(I) General partners. The applicant should provide the complete ownership, regardless of percentage owned, for all general partners. If a general partner is wholly or partially owned by a legal entity and not a natural person, a narrative or diagram must be included that lists the names and titles of all meeting the definition of "managerial official," as contained in Texas Business Organizations Code, § 1.002 , and a description of the ownership of each legal entity must be provided.

(II) Limited partners. The applicant should provide a complete list of all limited partners owning 5% or more of the partnership.

(III) Limited partnerships that register as limited liability partnerships. The applicant should provide the same information as that required for limited partnerships.

(iv) Corporations. Each officer and director must be named. Each shareholder holding 5% or more of the voting stock must be named if the corporation is privately-held. If a parent corporation is the sole or part owner of the proposed business, a narrative or diagram must be included that describes each level of ownership of 5% or greater.

(v) Limited liability companies. Each "manager," "officer," and "member" owning 5% or more of the company, as those terms are defined in Texas Business Organizations Code, § 1.002 , and each agent owning 5% or more of the company must be listed. If a member is a legal entity and not a natural person, a narrative or diagram must be included that describes each level of ownership of 5% or greater.

(vi) Trusts or estates. Each trustee or executor, as appropriate, must be listed.

(vii) All entity types. If a parent entity is a different type of legal business entity than the applicant, the parent entity's owners and principal parties should be disclosed according to the parent's entity type.

(C) Application Questionnaire. All questions must be answered. Questions requiring a "yes" answer must be accompanied by an explanatory statement and any appropriate documentation requested.

(D) Statutory Agent Disclosure. The appointment of statutory agent and consent to service must be provided by each applicant. The statutory agent is the person or entity to whom any legal notice may be delivered. The agent must be a Texas resident and list an address for legal service. If the statutory agent is a natural person, the address must be a physical residential address. If the applicant is a corporation or limited liability company, the statutory agent should be the registered agent on file with the Texas Secretary of State. If the statutory agent is not the same as the registered agent filed with the Secretary of State, then the applicant must submit certified minutes appointing the new agent.

(E) Personal Affidavit. Each individual meeting the definition of "principal party" as defined in § 85.102 of this title (relating to Definitions) must provide a personal affidavit. All requested information must be provided.

(F) Personal Questionnaire. Each individual meeting the definition of "principal party" as defined in § 85.102 of this title must provide a personal questionnaire. Each question must be answered. If any question, except question 1, is answered "yes," an explanation must be provided.

(G) Employment History. Each individual meeting the definition of "principal party" as defined in § 85.102 of this title must provide an employment history. Each principal party should provide a continuous 10-year history, accounting for time spent as a student, unemployed, or retired. The employment history must also include the individual's association with the entity applying for the license.

(H) Statement of Experience. Each applicant for a new license should provide a statement setting forth the details of the applicant's prior experience in the pawn or credit-granting business. If the applicant or its principal parties do not have significant experience in the pawnshop business as planned for the prospective licensee, the applicant must provide a written statement explaining the applicant's relevant background, why the commissioner should find that the applicant has the requisite experience, and how the applicant plans to obtain the necessary knowledge to operate lawfully and fairly.

(I) Financial Statement and Supporting Financial Information.

(i) All entity types. The financial statement must be dated no earlier than 60 days prior to the date of application submission. Applicants may also submit audited financial statements dated within one year prior to the application date in lieu of completing the Supporting Financial Information. All financial statements must be certified as true, correct, and complete. All financial statements must reflect the net assets as defined in the Texas Pawnshop Act, §371.003 of at least the lesser of the following amounts:

(I) As required in the Texas Pawnshop Act, §371.072(a), $150,000; or

(II) The amount required by the Texas Pawnshop Act, §371.072(b) as the license existed or should have existed under the law and rules in effect on August 31, 1999. A change in net asset requirement occurs with respect to any change of ownership or other event causing a change in the net asset requirement that may have occurred prior to September 1, 1999. The change in the net asset requirement is effective as of the date of change of ownership or other event causing the change of the net asset requirement.

(ii) Sole proprietorships. Sole proprietors must complete all sections of the Personal Financial Statement and the Supporting Financial Information, or provide a personal financial statement that contains all of the same information requested by the Personal Financial Statement and the Supporting Financial Information. The Personal Financial Statement and Supporting Financial Information must be as of the same date.

(iii) Partnerships. A balance sheet for the partnership itself as well as each general partner must be submitted. In addition, the information requested in the Supporting Financial Information must be submitted for the partnership itself and each general partner. All of the balance sheets and Supporting Financial Information documents for the partnership and all general partners must be as of the same date.

(iv) Corporations and limited liability companies. Corporations and limited liability companies must file a balance sheet that complies with generally accepted accounting principles (GAAP). The information requested in the Supporting Financial Information must be submitted. The balance sheet and Supporting Financial Information must be as of the same date. Financial statements are generally not required of related parties, but may be required by the commissioner if the commissioner believes they are relevant. The financial information for the corporation or limited liability company applicant should contain no personal financial information.

(v) Trusts and estates. Trusts and estates must file a balance sheet that complies with generally accepted accounting principles (GAAP). The information requested in the Supporting Financial Information must be submitted. The balance sheet and Supporting Financial Information must be as of the same date. Financial statements are generally not required of related parties, but may be required by the commissioner if the commissioner believes they are relevant. The financial information for the trust or estate applicant should contain no personal financial information.

(J) Assumed Name Certificates. For an applicant that does business under an "assumed name" as that term is defined in Texas Business & Commerce Code, Chapter 71, an Assumed Name Certificate must be filed as provided in this subparagraph.

(i) Unincorporated applicants. Unincorporated applicants using or planning to use an assumed name must file an assumed name certificate with the county clerk of the county where the proposed business is located in compliance with Texas Business & Commerce Code, Chapter 71, as amended. An applicant must provide a copy of the assumed name certificate that shows the filing stamp of the county clerk or, alternatively, a certified copy.

(ii) Incorporated or limited partnership applicants. Incorporated or limited partnership applicants using or planning to use an assumed name must file an assumed name certificate in compliance with Texas Business & Commerce Code, Chapter 71, as amended. Evidence of the filing bearing the filing stamp of the Texas Secretary of State must be submitted or, alternatively, a certified copy.

(2) Other required filings.

(A) Fingerprints.

(i) For all persons meeting the definition of "principal party" as defined in § 85.102 of this title, a complete set of legible fingerprints must be provided. All fingerprints should be submitted in a format prescribed by the OCCC and approved by the Texas Department of Public Safety and the Federal Bureau of Investigation.

(ii) For limited partnerships, if the Disclosure of Owners and Principal Parties under paragraph (1)(B)(iii)(I) of this subsection does not produce a natural person, the applicant must provide a complete set of legible fingerprints for individuals who are associated with the general partner as principal parties.

(iii) For entities with complex ownership structures that result in the identification of individuals to be fingerprinted who do not have a substantial relationship to the proposed applicant, the applicant may submit a request to fingerprint three officers or similar employees with significant involvement in the proposed business. The request should describe the relationship and significant involvement of the individuals in the proposed business. The agency may approve the request, seek alternative appropriate individuals, or deny the request.

(iv) For individuals who have previously been licensed by the OCCC and principal parties of entities currently licensed, fingerprints are not required.

(v) For individuals who have previously submitted fingerprints to another state agency (e.g., Texas Department of Savings and Mortgage Lending), fingerprints are still required to be submitted to the OCCC, as per Texas Finance Code, § 14.152 . Fingerprints cannot be disclosed to others, except as authorized by Texas Government Code, § 560.002 , as amended.

(B) Entity documents.

(i) Partnerships. A partnership applicant must submit a complete and executed copy of the partnership agreement. This copy must be signed and dated by all partners. If the applicant is a limited partnership or a limited liability partnership, provide evidence of filing with the Texas Secretary of State and a certificate of good standing from the Texas Comptroller of Public Accounts.

(ii) Corporations. A corporate applicant, domestic or foreign, must provide the following documents:

(I) a complete copy of the articles of incorporation and any amendments;

(II) a copy of the relevant portions of the bylaws addressing the required number of directors and the required officer positions for the corporation;

(III) a copy of the minutes of corporate meetings that record the election of all current officers and directors as listed on the Disclosure of Owners and Principal Parties, or a certification from the secretary of the corporation identifying the current officers and directors as listed on the Disclosure of Owners and Principal Parties;

(IV) if the statutory agent is not the same as the registered agent filed with the Texas Secretary of State:

(-a-) a copy of the minutes of corporate meetings that record the election of the statutory agent; or

(-b-) a certification from the secretary of the corporation identifying the statutory agent; and

(V) a certificate of good standing from the Texas Comptroller of Public Accounts.

(iii) Publicly-held corporations. In addition to the items required for corporations, a publicly-held corporation must file the most recent 10K or 10Q for the applicant or for the parent company.

(iv) Limited liability companies. A limited liability company applicant, domestic or foreign, must provide the following documents:

(I) a complete copy of the articles of organization;

(II) a copy of the relevant portions of the operating agreement or regulations addressing responsibility for operations;

(III) a copy of the minutes of company meetings that record the election of all current officers and directors as listed on the Disclosure of Owners and Principal Parties, or a certification from the secretary of the company identifying the current officers and directors as listed on the Disclosure of Owners and Principal Parties;

(IV) if the statutory agent is not the same as the registered agent filed with the Texas Secretary of State:

(-a-) a copy of the minutes of company meetings that record the election of the statutory agent; or

(-b-) a certification from the secretary of the company identifying the statutory agent; and

(V) a certificate of good standing from the Texas Comptroller of Public Accounts.

(v) Trusts. A copy of the relevant portions of the instrument that created the trust addressing management of the trust and operations of the applicant must be filed with the application.

(vi) Estates. A copy of the instrument establishing the estate must be filed with the application.

(vii) Foreign entities. In addition to the items required by this section, a foreign entity must provide:

(I) a certificate of authority to do business in Texas, if applicable; and

(II) a statement of where records of Texas pawn transactions will be kept. If these records will be maintained at a location outside of Texas, the applicant must acknowledge responsibility for the travel costs associated with examinations in addition to the usual assessment fee or agree to make all the records available for examination in Texas.

(viii) Formation document alternative. As an alternative to the entity-specific formation document applicable to the applicant's entity type (e.g., for a corporation, articles of incorporation), an applicant may submit a "certificate of formation" as defined in Texas Business Organizations Code, § 1.002 , if the certificate of formation provides the entity formation information required by this section for that entity type.

(C) Map. A map must be provided of the area where the proposed license will be situated graphically defining the site of the proposed pawnshop, the location, including the name and address, of each pawnshop within three miles of the location, and the scale at which the map was constructed. The commissioner may require a survey to determine the distance from the proposed pawnshop location to existing operating pawnshops.

(D) Zoning. Each applicant must file a certificate of occupancy or other evidence that the operation of a pawnshop is permitted at the proposed site.

(E) Lease agreement or proof of ownership. Each applicant must file an executed lease agreement, deed, or other evidence that the entity has control of the proposed site.

(F) Proof of general liability and fire insurance. Each applicant must file proof of insurance as required in § 85.403 of this title (relating to Insurance). The policy must explicitly cover loss of pledged goods.

(G) Bond. The commissioner may require a bond under the Texas Pawnshop Act, §371.056, when the commissioner finds that this would serve the public interest. When a bond is required, the commissioner will give written notice to the applicant. Should a bond not be submitted within 40 calendar days of the date of the commissioner's notice, any pending application may be denied.

(b) Subsequent applications. If the applicant is currently licensed and filing an application for a new location, the applicant must provide the information that is unique to the new location including the Application for License, Application Questionnaire, Disclosure of Owners and Principal Parties, a new Financial Statement, a map of the area where the proposed license will be situated graphically, a certificate of occupancy or other evidence that the operation of a pawnshop is permitted at the proposed site, a lease agreement or proof of ownership, and proof of general liability and fire insurance as provided in subsection (a) of this section. Other information required by this section need not be filed if the information on file with the OCCC is current and valid.

(c) Distances will be measured in a direct line despite travel patterns and natural or manmade obstacles and will be measured from front door to front door. The commissioner may require a survey to determine distances from the proposed pawnshop location to existing operating pawnshops. In examining the distance requirements of a proposed pawnshop, the existence or location of an inactive license will not be considered in the determination of the distance requirements. An application for a new license may not be approved unless the eligibility requirements are met and the proposed facility is within:

(1) a county with a population of less than 250,000 according to the most recent decennial census regardless of distance from another operating pawnshop;

(2) a county with a population of 250,000 or more according to the most recent decennial census and the pawnshop is not less than two miles from another operating pawnshop.

Source:
The provisions of this §85.202 adopted to be effective June 7, 2010, 35 TexReg 3471

§ 85.203. Relocation

(a) Definition. As used in §371.059 of the Texas Pawnshop Act and in this section, the "relocation of a licensed pawnshop" means:

(1) the act of moving an existing licensed operating pawnshop from its existing location to a new location;

(2) the activation of an inactive license for purposes of establishing and operating a pawnshop at a facility.

(b) Approval of relocation. A pawnshop may not be relocated without the prior approval of the commissioner. An application for relocation must be filed as prescribed by this section before a pawnshop may begin operation at a new location.

(c) Filing requirements. An application for relocation must be submitted in a format prescribed by the commissioner at the date of filing and in accordance with the commissioner's instructions. The commissioner may accept the use of prescribed alternative formats in order to accept approved electronic submissions. The application for relocation must include the following:

(1) Application for Relocation.

(2) Financial Statement and Supporting Financial Information. If the license requested for relocation includes the activation of a license that is inactive at the date of the request for relocation, a new Financial Statement is required. The instructions in § 85.202 of this title (relating to Filing of New Application) are applicable to this filing.

(3) Other required filings.

(A) Map. A map must be provided of the area where the proposed license will be situated graphically defining the site of the proposed pawnshop, the location, including the name and address, of each pawnshop within three miles of the location, and the scale at which the map was constructed. The commissioner may require a survey to determine the distance from the proposed pawnshop location to existing operating pawnshops.

(B) Zoning. Each applicant must file a certificate of occupancy or other evidence that the operation of a pawnshop is permitted at the proposed site.

(C) Lease agreement or proof of ownership. Each applicant must file an executed lease agreement, deed, or other evidence that the entity has control of the proposed site.

(D) Proof of general liability and fire insurance. If the license requested for relocation includes the activation of a license that is inactive at the date of the request for relocation, proof of insurance as required in § 85.403 of this title (relating to Insurance) must be filed. The policy must explicitly cover loss of pledged goods.

(d) Engaging in business. An applicant may not advertise the opening of a relocated pawnshop prior to approval, except that a pawnbroker who intends to relocate a pawnshop may, beginning 90 days or less prior to the projected date of relocation, post a sign inside the existing shop and give customers a written notice of the anticipated relocation pursuant to subsection (e) of this section.

(e) Notice to customer. A written notice of relocation must be given to each pledgor whose pledged goods will be moved. Five days prior to relocation the pawnbroker must mail written notices to each pledgor who has not been given a written notice prior to that date. A notice must identify the pawnshop, both the old and the new locations, the telephone number of the new location, and the date the relocation is effective. The commissioner may modify the notification requirement if the relocation adversely affects pledgors. The modification may require the pawnbroker to extend the maturity date of pawn transactions or waive the collection of pawn service charges which may accrue after relocation. No relocation may be made which will adversely affect pledgors to the extent that redemption is unreasonable or impossible due to the distance between the locations. The commissioner may approve notification by signs in lieu of notification by mail if no pledgors will be adversely affected. When a relocation also involves a transfer of ownership, the buyer may agree to assume responsibility for compliance with this subsection.

(f) Relocation distances. Distances will be measured in a direct line despite travel patterns and natural or manmade obstacles, and will be measured from front door to front door. The commissioner may require a survey to determine distances from the proposed pawnshop location to existing operating pawnshops. In examining the distance requirements of a proposed pawnshop, the existence or location of an inactive license will not be considered in the determination of the distance requirements. An application for relocation may not be approved unless the eligibility requirements are met.

(1) If the proposed facility is within a county with a population of less than 250,000 according to the most recent decennial census, there is no distance requirement from another operating pawnshop;

(2) If the proposed facility is within a county with a population of 250,000 or more according to the most recent decennial census and:

(A) if the pawnshop was licensed and was not operating, it may locate not less than one mile from an operating pawnshop;

(B) if the pawnshop has been operating continuously at its current location for at least three years, it may locate within one mile of its current location regardless of distance from another operating pawnshop;

(C) if the pawnshop has been in operation, it may locate not less than one mile from an operating pawnshop.

(g) Pawn transactions. If the pawnbroker is only transferring pawn transactions from one licensed location to another licensed location, the pawnbroker must comply with subsection

(e) of this section and provide, if requested, a list of pawn transactions transferred. This list of transferred pawn transactions must include the pawn ticket number and the full name of the pledgor.

Source:
The provisions of this §85.203 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective September 19, 2005, 30 TexReg 5335; amended to be effective March 15, 2007, 32 TexReg 1232; amended to be effective June 7, 2010, 35 TexReg 3471

§ 85.204. Temporary and Permanent Operation of Facility

(a) The pawnshop must commence operation within a period of six months after the date of approval unless an extension is granted, in writing, by the commissioner. No more than one six-month extension will be approved by the commissioner, unless good cause for the extension is shown. At the end of any approved extension, if the pawnshop has not been opened, the authority for approval of the pawnshop will be forfeited.

(b) The commissioner may approve opening and operating a temporary facility for an approved application, provided that the facility is within a one-half mile radius of the approved, permanent site. The operation of the temporary facility will cease immediately upon the permanent facility being completed for occupancy. The temporary facility must not operate longer than 18 months unless extended in writing by the commissioner. The commissioner may require regular status reports regarding the progress of occupying the approved, permanent site.

Source:
The provisions of this §85.204 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective June 7, 2010, 35 TexReg 3471

§ 85.205. Transfer of License

(a) Definition. As used in this chapter, a "transfer of ownership" does not include a change in proportionate ownership as defined in § 85.208 of this title (relating to Change in Form or Proportionate Ownership). Transfer of ownership includes the following:

(1) an existing owner of a sole proprietorship relinquishes that owner's entire interest in a license or an entirely new entity has obtained an ownership interest in a sole proprietorship license;

(2) any purchase or acquisition of control of a licensed general partnership, in which a partner relinquishes that owner's entire interest or a new general partner obtains an ownership interest;

(3) any change in ownership of a licensed limited partnership interest:

(A) in which a limited partner owning 5% or more relinquishes that owner's entire interest;

(B) in which a new limited partner obtains an ownership interest of 5% or more;

(C) in which a general partner relinquishes that owner's entire interest; or

(D) in which a new general partner obtains an ownership interest (transfer of ownership occurs regardless of the percentage of ownership exchanged of the general partner);

(4) any change in ownership of a licensed corporation:

(A) in which a new stockholder obtains 5% or more of the outstanding voting stock in a privately-held corporation;

(B) in which an existing stockholder owning 5% or more relinquishes that owner's entire interest in a privately-held corporation;

(C) any purchase or acquisition of control of 51% or more of a company which is the parent or controlling stockholder of a licensed privately-held corporation; or

(D) any stock ownership changes that result in a change of control (i.e., 51% or more) for a licensed publicly-held corporation;

(5) any change in the membership interest of a licensed limited liability company:

(A) in which a new member obtains an ownership interest of 5% or more;

(B) in which an existing member owning 5% or more relinquishes that member's entire interest; or

(C) in which a purchase or acquisition of control of 51% or more of any company which is the parent or controlling member of a licensed limited liability company occurs;

(6) any acquisition of a license by gift, devise, or descent; and

(7) any purchase or acquisition of control of a licensed entity whereby a substantial change in management or control of the business occurs, despite not fulfilling the requirements of paragraphs (1) - (6) of this subsection, and the commissioner has reason to believe that proper regulation of the licensee dictates that a transfer must be processed.

(b) Approval of transfer. No pawnshop license may be sold, transferred or assigned without written approval by the commissioner.

(c) Filing requirements. An application for transfer of a pawnshop license must be submitted in a format prescribed by the commissioner at the date of filing and in accordance with the rules and instructions. The commissioner may accept the use of prescribed alternative formats in order to accept approved electronic submissions. Appropriate fees must be filed with the transfer application, and the application for transfer must include the following:

(1) Required application information.

(A) New licensees filing transfers. The information required for new license applications under § 85.202 of this title (relating to Filing of New Application) must be submitted by new licensees filing transfers. The instructions in § 85.202 of this title are applicable to these filings. In addition, evidence of transfer of ownership as described in paragraph (2) of this subsection must also be submitted.

(B) Existing licensees filing transfers. If the applicant is currently licensed and filing a transfer, the applicant must provide the information that is unique to the transfer event, including the Application for Pawnshop License, Application Questionnaire, Disclosure of Owners and Principal Parties, a new Financial Statement, and a lease agreement or proof of ownership, as provided in § 85.202 of this title. The instructions in § 85.202 of this title are applicable to these filings. Other information required by § 85.202 of this title need not be filed if the information on file with the OCCC is current and valid. In addition, evidence of transfer of ownership as described in paragraph (2) of this subsection must also be submitted.

(2) Evidence of transfer of ownership. Documentation evidencing the transfer of ownership must be filed with the application and should include one of the following:

(A) a copy of the asset purchase agreement when only the assets have been purchased;

(B) a copy of the stock purchase agreement or other evidence of acquisition if voting stock of a corporate licensee has been purchased or otherwise acquired;

(C) any document that transferred ownership by gift, devise, or descent, such as a probated will or a court order; or

(D) any other documentation evidencing the transfer event.

(d) Permission to operate. No business under the license shall be conducted by any license transferee until the application has been received, all applicable fees have been paid, and a request for permission to operate has been approved. In order to be considered, a permission to operate must be in writing. Additionally, the transferor must grant the transferee the authority to operate under the transferor's license pending approval of the transferee's new license application. The transferor must accept full responsibility to any customer and to the OCCC for the licensed business for any acts of the transferee in connection with the operation of the business. The permission to operate must be submitted before the transferee takes control of the licensed operation. The agreement shall set a definite period of time for the transferee to operate under the transferor's license. A request for permission to operate may be denied even if it contains all of the required information. Two companies may not simultaneously operate under a single license. If the OCCC grants a permission to operate, the transferor must cease operating under the authority of the license.

(e) Application filing deadline. Applications filed in connection with transfers of ownership may be filed in advance but must be filed no later than 10 calendar days following the actual transfer.

Source:
The provisions of this §85.205 adopted to be effective June 7, 2010, 35 TexReg 3471

§ 85.206. Processing of Application

(a) Initial review. A response to an incomplete application will ordinarily be made within 14 calendar days of receipt stating that the application is incomplete and specifying the information required for acceptance.
(b) Application acceptance. An application will not be accepted until it contains the appropriate fees and substantially all of the items required in accordance with §85.202 of this title (relating to Filing of New Application), §85.203 of this title (relating to Relocation), or §85.205 of this title (relating to Transfer of License) as appropriate.
(c) Complete application. An application is complete when:
  (1) the application conforms to the statutes, rules, and published instructions;
  (2) all fees have been paid; and
  (3) all requests for additional information have been satisfied.
(d) Competing application. An application in a county with a population of 250,000 or more will be acted upon based on the chronological order in which the application was accepted pursuant to subsection (b) of this section. A competing application may not be granted until a final ruling on any preceding competing application has been made.
(e) Notice of application and protest procedures. A notice of the application will be mailed to each pawnshop licensee in the county of the proposed location. The notice will state a date and time, 10 working days following the date of notice, by which any interested person may request a hearing. Any pawnbroker who believes that the applicant's proposed pawnshop will significantly affect that pawnbroker's current business may submit a sworn petition to be admitted as a party in opposition to an application for a new or relocated pawnshop. The sworn petition must contain facts relevant to the eligibility of the applicant and how the protesting pawnshop licensee will be affected by the approving of the proposed application. The commissioner will admit a protesting pawnshop licensee as a party if the protestor can show that it would be significantly affected by the granting of the license and if the protestor can show facts relevant to the eligibility of the applicant. A copy of the sworn petition will be delivered to the applicant and certification of that delivery will be made to the commissioner at the time of filing. A person may appear, present evidence, and be heard on a license only if the person has filed a sworn petition and been accepted as a party by the commissioner.
(f) Decision on application. The commissioner may approve or deny an application.
  (1) Approval. The commissioner will approve the application upon payment of the appropriate fees and a finding of the eligibility and statutory location requirements.
    (A) Eligibility requirements.
      (i) Good moral character. In evaluating an applicant's moral character the commissioner will consider criminal history information described in §85.601 of this title (relating to Effect of Criminal History Information on Applicants and Licensees) and the applicant's conduct and activities as described in §85.602 of this title (relating to Crimes Directly Related to Fitness for License; Mitigating Factors).
      (ii) A belief that the pawnshop will be operated lawfully and fairly. In evaluating this standard, the commissioner will consider an applicant's background and history. If the commissioner questions the applicant's ability to meet this standard, the commissioner may require further conditions, such as probation, to favorably consider an applicant for a license.
      (iii) Financial responsibility. In evaluating the financial responsibility of an applicant, the commissioner may investigate the history of an applicant and the principal parties of the applicant as to the payment of debts, taxes, and judgments, if any, and handling of financial affairs generally.
      (iv) Experience. In evaluating experience, the commissioner will consider the applicant's background and history as well as the personnel that the applicant plans to use in the operation and management of the pawnshop.
      (v) General fitness to command the confidence of the public. The applicant's overall background and history will be considered. Providing misleading information on the application or failing to disclose information to the OCCC may be grounds for denial.
      (vi) Net assets. Net assets are calculated by taking the sum of current assets and subtracting all liabilities either secured by those current assets or unsecured. Liabilities not included in the calculation are those liabilities that are secured by assets other than current assets including subordinated debt. Debt that is either unsecured or secured by current assets may be subordinated to the net asset requirement pursuant to an agreement of the parties providing that assets other than current assets are sufficient to secure the debt.
    (B) Distance requirement. A pawnshop within a county with a population of 250,000 or more must not be less than two miles from an existing pawnshop or if the application is for a relocation it must meet the requirements in §85.203(f)(2) of this title.
  (2) Denial.
    (A) Application incomplete 30 days after deficiency notice sent. If an application has not been completed within 30 days after notice of deficiency has been sent to the applicant, the application may be denied.
    (B) Failure to demonstrate requirements. The commissioner may also deny an application when the applicant fails to demonstrate the eligibility requirements or the applicant fails to meet the distance requirements.
(g) Hearing. When an application is denied, the applicant has 30 days from the date of the denial to request a hearing in writing to contest the denial. Also, upon a proper and timely protest pursuant to subsection (e) of this section, a hearing will be set. This hearing will be conducted within 60 days of the date of the appeal or protest unless the parties agree to an extension of time or the administrative law judge grants an extension of time pursuant to the Administrative Procedure Act, Texas Government Code, Chapter 2001 and the rules of procedure applicable under §9.1(a) of this title (relating to Application, Construction, and Definitions), before an administrative law judge who will recommend a decision to the commissioner. The commissioner will then issue a final decision after review of the recommended decision either approving or denying the license.
(h) Processing time. The commissioner will ordinarily approve or deny a license application within 60 days after the date the application is complete. The commissioner may take more time if previous competing applications are on file, the placement of a reinstated expired pawnshop license would have an impact on the approval of an application, or where other good cause exists as defined by Texas Government Code, §2005.004 for exceeding the established time periods in this section.
Source Note: The provisions of this §85.206 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective September 19, 2005, 30 TexReg 5335; amended to be effective June 7, 2010, 35 TexReg 3471; amended to be effective July 1, 2014, 39 TexReg 3392; amended to be effective March 1, 2016, 41 TexReg 121.


§ 85.207. Bond

The commissioner may require a bond under Texas Pawnshop Act, §371.056 when the commissioner finds that this would serve the public interest. When a bond is required, the commissioner will give written notice to the applicant. Upon failure to submit a bond within 40 calendar days of the date of the commissioner's notice, the pending application may be denied.

Source:
The provisions of this §85.207 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective June 7, 2010, 35 TexReg 3471

§ 85.208. Change in Form or Proportionate Ownership

Organizational form. When any licensee or parent of a licensee desires to change the organizational form of its business (e.g., from sole proprietorship to corporation), the licensee must advise the commissioner in writing of the change within 10 calendar days by filing the appropriate transfer application documents as provided in § 85.205 of this title (relating to Transfer of License). In addition, the licensee must submit a copy of the relevant portions of the organizational document for the new entity (e.g., articles of incorporation) addressing the ownership and management of the new entity.

(b) Merger. A merger of a licensee is a change of ownership that results in a new or different surviving entity and requires the filing of a transfer application pursuant to § 85.205 of this title. A merger of the parent entity of a licensee that leads to the creation of a new entity or results in a different surviving parent entity requires a transfer application pursuant to § 85.205 of this title. Mergers or transfers of other entities with a beneficial interest beyond the parent entity level only require notification within 10 calendar days.

(c) Proportionate ownership.

(1) A change in proportionate ownership that results in the exact same owners still owning the business, and does not meet the requirements described in paragraph (2) of this subsection or the requirements of § 85.205(a)(4) or (5) of this title, does not require a transfer. Such a proportionate change in ownership does not require the filing of a transfer application, but does require written notification to the commissioner when the cumulative ownership change to a single entity or individual amounts to 5% or greater. This subsection does not apply to a publicly-held corporation that has filed with the OCCC the most recent 10K or 10Q filing of the licensee or the publicly-held parent corporation, although a transfer application may be required under § 85.205 of this title.

(2) A proportionate change in which an owner that previously held under 5% obtains an ownership interest of 5% or more, requires a transfer under § 85.205 of this title.

(d) Notice deadline. A notice filed in connection with a change in proportionate ownership may be filed in advance but must be filed with the commissioner no later than 10 calendar days following the actual change.

Source:
The provisions of this §85.208 adopted to be effective June 7, 2010, 35 TexReg 3471

§ 85.209. Amendments to Pending Application

(a) Upon request, each applicant must provide information supplemental to that contained in the applicant's original application documents.

(b) Any action, fact, or information that would require a materially different answer than that given in the original license application and which relates to the qualifications for license must be reported to the commissioner within 10 business days after the person has knowledge of the action, fact, or information.

Source:
The provisions of this §85.209 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective June 7, 2010, 35 TexReg 3471

§ 85.210. License Status

(a) Inactivation of active license. A licensee may cease operating a pawnshop and choose to inactivate the license. A license may be inactivated by giving notice of the cessation of operations not less than 30 calendar days prior to the anticipated inactivation date. Notification must be filed on the Inactive Pawnshop License Notification or an approved electronic submission as prescribed by the commissioner. The notice must include the new mailing address for the license, the effective date of the inactivation, the fee for amending the license, a certification that no loans will be made or collected under the license until it is activated, a notice to pledgors that pawn loans are being relocated, and a plan ensuring pledged goods are made available for redemption. If an active license is not being used for the active operation of a pawnshop, the commissioner may unilaterally place the license in inactive status. A licensee must continue to pay the annual assessment fees for an inactive license as outlined in § 85.211 of this title (relating to Fees), or the license will expire.

(b) Activation of inactive license. Activation of an inactive license must comply with the relocation requirements set forth in § 85.203 of this title (relating to Relocation).

(c) Voluntary surrender of license. Subject to § 85.606(b) of this title (relating to Surrender of License), a licensee may voluntarily surrender a license by providing written notice of the cessation of operations, a request to surrender the license, and by submitting the license certificate. A voluntary surrender will result in cancellation of the license.

(d) Expiration. A license will expire on the later of June 30 of each year or the 16th day after the written notice of delinquency is given unless the annual assessment fees are paid as per § 85.104 of this title (relating to Renewal Dates of Licenses). A licensee that pays the annual assessment fees will automatically be renewed even though a new license may not be issued.

Source:
The provisions of this §85.210 adopted to be effective June 7, 2010, 35 TexReg 3471

§ 85.211. Fees

(a) New licenses. A $500 non-refundable investigation fee is assessed each time an application for a new license is filed. In addition, the applicant is initially required to pay the initial assessment fee required by subsection (e)(6) of this section. This assessment fee will be refunded if the application is not approved.

(b) Subsequent licenses. A $250 non-refundable investigation fee is assessed each time an application for a new license of an existing licensee is filed or if the application involves substantially identical principals and owners of a licensed pawnshop. In addition, the applicant is initially required to pay the initial assessment fee required by subsection (e)(6) of this section. This assessment fee will be refunded if the application is not approved.

(c) License transfers. An investigation fee of $500 for the first license transfer and $250 on each additional license transfer sought simultaneously is required. If the application involves substantially identical principals and owners of a licensed pawnshop, then the fee is $250 for the first license transfer. License transfer fees are nonrefundable.

(d) Fingerprint processing. A non-refundable fee as prescribed by the commissioner will be charged to recover to costs of investigating each principal party's fingerprint record. This fee must be paid for each fingerprint record filed with applications for new licenses or license transfers.

(e) Annual renewal and assessment fees.

(1) An annual assessment fee is required for each licensed pawnshop of:

(A) A fixed fee of $625; and

(B) A volume fee of $0.05 per each $1,000 loaned as calculated from the most recent annual report as described in § 85.502 of this title (relating to Annual Report).

(2) The minimum annual assessment for each active license will be no less than $625.

(3) The maximum annual assessment for each active license will be no more than $1,200.

(4) The minimum annual assessment for each inactive license will be no less than $250.

(5) A pawnshop license will expire on the later of June 30 or the 16th day after the written notice of delinquency is given unless the annual assessment fees have been paid.

(6) Upon approval of a new pawnshop license pursuant to § 85.206 of this title (relating to Processing of Application), the first year's fixed fee will be $625.

(f) License amendments. A fee of $25 must be paid each time a licensee amends a license by inactivating a license, activating an inactive license in a county with a population of less than 250,000, changing the assumed name of the licensee, or relocating an office in a county with a population of less than 250,000. An activation or relocation in a county with a population of 250,000 or more will require a $250 investigation fee and other fees as may be required of a new license applicant.

(g) License duplicates. The fee for a license duplicate is $10.

(h) Each applicant for a new or relocated license will pay $1.00 to the commissioner for each notice of application that is required to be mailed.

(i) Costs of hearings. The commissioner or administrative law judge may assess the costs of an administrative appeal pursuant to Texas Finance Code, § 14.207for a hearing afforded under § 85.206(g) of this title (relating to Processing of Application), including the cost of the administrative law judge, the court reporter, and agency staff representing the OCCC at a hearing. If it is determined that a protest is frivolous or without basis, then the cost associated with the hearing may be assessed solely to the protesting party.

(j) Excess payment of fees. Any excess payment of fees received by the commissioner may be held to offset anticipated fees that may be owed by the licensee or applicant.

Source:
The provisions of this §85.211 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective March 14, 2002, 27 TexReg 1727; amended to be effective September 19, 2005, 30 TexReg 5335; amended to be effective April 12, 2010, 35 TexReg 1973

§ 85.212. Application and Notices as Public Records

Once a license application or notice is filed with the OCCC, it becomes a "state record" under Texas Government Code, § 441.180(11) , and "public information" under Government Code, § 552.002 . Under Government Code, §§ 441.190 , 441.191 and 552.004 , the original applications and notices must be preserved as "state records" and "public information" unless destroyed with the approval of the director and librarian of the State Archives and Library Commission under Government Code, § 441.187 . Under Government Code, § 441.191 , the OCCC may not return any original documents associated with a pawnshop license application or notice to the applicant or licensee. An individual may request copies of a state record under the authority of the Texas Public Information Act, Government Code, Chapter 552.

Source:
The provisions of this §85.212 adopted to be effective September 5, 1999, 24 TexReg 6714; amended to be effective June 7, 2010, 35 TexReg 3471

Division 3. PAWNSHOP EMPLOYEE LICENSE

§ 85.301. Filing of New Application

An application for issuance of a new pawnshop employee license must be submitted in a format prescribed by the commissioner at the date of filing a