California Senate Bill SB212 Latest Draft

 BILL NUMBER: SB 212AMENDED BILL TEXT AMENDED IN SENATE MARCH 29, 2011 INTRODUCED BY Senator De Len 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 Len. 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.