text:
A pawnbroker may charge as prescribed in the following schedule: Schedule of Charges (a) A charge not exceeding three dollars ($3) may be made on any loan for not more than three months which does not exceed nineteen dollars and ninety-nine cents ($19.99).

(b) A charge not exceeding six dollars ($6) may be made on any loan for not more than three months of twenty dollars ($20) or more, but not exceeding forty-nine dollars and ninety-nine cents ($49.99).

(c) A charge not exceeding nine dollars ($9) may be made on any loan for not more than three months of fifty dollars ($50) or more, but not exceeding seventy-four dollars and ninety-nine cents ($74.99).

(d) A charge not exceeding twelve dollars ($12) may be made on any loan for not more than three months of seventy-five dollars ($75) or more, but not exceeding ninety-nine dollars and ninety-nine cents ($99.99).

(e) A charge not exceeding fifteen dollars ($15) may be made on any loan for not more than three months of one hundred dollars ($100) or more, but not exceeding one hundred seventy-four dollars and ninety-nine cents ($174.99).

(f) A charge not exceeding 9 percent may be made on any loan for not more than three months on any loan of one hundred seventy-five dollars ($175) or more, but not exceeding two thousand four hundred ninety-nine dollars and ninety-nine cents ($2,499.99).

(g) The monthly charge for any extension of a written contract required by Section 21201 or 21201.5 shall be computed in accordance with the provisions of Section 21200.

(h) The schedule of charges prescribed by this section shall be posted in a place clearly visible to the general public.

history: (History: Amended by Stats. 2015, Ch. 245, Sec. 3. (SB 285) Effective January 1, 2016.)


kind: section

code: FIN

text:
(a) In addition to other allowed charges, at the time property is redeemed or a replacement loan is issued pursuant to Section 21201.5, the pawnbroker may collect a handling, storage, and security charge for pawned articles. The maximum amount that may be charged pursuant to this section is in accordance with the following schedule:

(1) Five dollars ($5) or 2.5 percent of the loan amount for any article that can be contained within one cubic foot.

(2) Ten dollars ($10) or 2.5 percent of the loan amount for any article that cannot be contained within one cubic foot, but can be contained within three cubic feet.

(3) Twenty dollars ($20) or 2.5 percent of the loan amount for any article that cannot be contained within three cubic feet, but can be contained within six cubic feet.

(4) Thirty dollars ($30) or 2.5 percent of the loan amount for any article that cannot be contained within six cubic feet and five dollars ($5) for each additional cubic foot in excess of six cubic feet.

(b) For purposes of this section, cubic feet shall be determined by multiplying the width of an article, at its greatest width, by the depth of an article, at its greatest depth, by the height of an article, at its greatest height.

history: (History: Amended by Stats. 2024, Ch. 185, Sec. 1. (SB 1198) Effective January 1, 2025.)

division: 8. PAWNBROKERS

chapter: 2. Pawnbroker Regulations

path: 8. PAWNBROKERS > 2. Pawnbroker Regulations


text: The maximum charge of compensation charged by a pawnbroker pursuant to the authority of Section 21200 shall be posted in a place clearly visible to the general public.

history: (History: Added by renumbering Section 21200.5 by Stats. 1969, Ch. 25.)


text: In addition to other allowed charges, a pawnbroker may collect a processing charge of twenty dollars ($20) for each firearm pawned.

history: (History: Amended by Stats. 2019, Ch. 189, Sec. 3. (AB 1186) Effective January 1, 2020.)


text: In addition to other allowed charges, a pawnbroker may collect a remote transaction fee, if the pledgor elects to request a replacement loan or to redeem a loan through electronic means, of up to 3.0 percent of the transaction amount to cover the recurring costs associated with software applications.

history: (History: Added by Stats. 2024, Ch. 185, Sec. 3. (SB 1198) Effective January 1, 2025.)


text: No licensed pawnbroker shall promise any seller of tangible personal property that the seller may repurchase property sold to the pawnbroker.

history: (History: Added by renumbering Section 21200.9 by Stats. 2024, Ch. 185, Sec. 2. (SB 1198) Effective January 1, 2025.)


text:
(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 their 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 their possession every article pledged to them for the duration of the loan period. During that 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 the pledgor’s 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 they desire, 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 the pledgor’s assigns, to the pledged article, to hold and dispose of as the pawnbroker’s 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 they have 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.

history: (History: Amended by Stats. 2019, Ch. 189, Sec. 4. (AB 1186) Effective January 1, 2020.)


text: Whenever a pledger, or his or her assignee, loses a pawn ticket, a fee of not to exceed ten dollars ($10) may be charged for services of verifying the identification of the claimant, fingerprinting the claimant, and having the claimant execute a declaration under penalty of perjury.

history: (History: Added by Stats. 1991, Ch. 202, Sec. 3.)


text: If the pledgor fails to redeem any pawned item during the loan period, thereby obliging the pawnbroker to mail or electronically transmit the notice required under Section 21201, the pawnbroker may charge a fee of up to seven dollars ($7) for services and costs pertaining to the preparation and mailing or electronic transmission of the notice, in addition to any other allowed charges.

history: (History: Amended by Stats. 2024, Ch. 185, Sec. 4. (SB 1198) Effective January 1, 2025.)


text:
(a) The written contract required pursuant to Section 21201 shall contain a provision in 8-point type stating whether the item or items pledged are to be stored at the business premises of the pawnbroker and adjacent to this provision, the following disclosure shall be made: “We must return your property within two business days if your property is stored off premises.”

(b) Every pawnbroker shall display a sign at his or her premises indicating whether or not pawned items are insured.

(c) If a pawnbroker stores pledged property at a location other than the pawnshop, the pawnbroker shall post a conspicuous sign stating that pawned items may be stored off premises with the consent of the pledgor and that following the redemption of a loan, property is required to be returned the next calendar day upon which both the pawnbroker’s store and the storage facility are open, not to exceed two business days.

(d) Notwithstanding Section 21209, a violation of this section is an infraction.

(e) This section shall become operative July 1, 1995.

history: (History: Amended by Stats. 2002, Ch. 404, Sec. 2. Effective January 1, 2003.)


text: Charges for the first three months of any loan made pursuant to the written contract required by Section 21201 or 21201.5 shall be determined by the application of the schedule of charges contained in Section 21200.5. Charges for any extension of time following the first three months of any loan shall be determined by application of the schedule of maximum compensation contained in Section 21200.

history: (History: Amended by Stats. 2011, Ch. 318, Sec. 5. (AB 424) Effective January 1, 2012.)


text:
(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.

history: (History: Amended by Stats. 2015, Ch. 417, Sec. 3. (SB 300) Effective January 1, 2016.)


text:
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.

history: (History: Added by Stats. 2015, Ch. 417, Sec. 4. (SB 300) Effective January 1, 2016.)


text: Every pawnbroker shall enter at the time of the transaction, in records of loans and pledges kept by him for that purpose, the date, duration, amount, and rate of interest or charges of every loan made by him, a reasonably accurate description of the property pledged, the name and residence address of the pledgor. Every pawnbroker shall deliver to the pledgor a written copy of such entry. Such written copy need not include the name and address of the pledgor.

history: (History: Amended by Stats. 1979, Ch. 1037.)


text: Any property held in pawn which is not subject to a hold pursuant to Section 21647 of the Business and Professions Code shall be returned to the pledgor immediately upon redemption of the loan. However, if the property is stored off the business premises of the pawnbroker, following the redemption of the loan the property shall be returned the next calendar day when both the pawnbroker’s store and the storage facility are open, not to exceed two business days.

history: (History: Amended by Stats. 2002, Ch. 404, Sec. 4. Effective January 1, 2003.)


text: Every pawnbroker, upon redemption of a loan contract, shall provide the borrower with a receipt that correctly states in detail all of the fees, charges, and compensation paid by the borrower to the pawnbroker.

history: (History: Added by Stats. 1998, Ch. 804, Sec. 2. Effective January 1, 1999.)


text: Representatives of the pawnbroker industry shall poll their members annually to gather data relating to the current financial condition of the California pawn industry.

history: (History: Added by Stats. 2015, Ch. 245, Sec. 7. (SB 285) Effective January 1, 2016.)


text:
Every pawnbroker shall produce his or her records of loans and all pledged property, for inspection by the following persons:

(a) Any officer holding a warrant authorizing him or her to search for personal property.

(b) Any peace officer or employee designated by the chief of police or sheriff.

(c) Any officer holding a court order directing him or her to examine such records or pledged property.

history: (History: Amended by Stats. 1992, Ch. 647, Sec. 8. Effective January 1, 1993.)


text: Whenever any property is taken from a pawnbroker by a peace officer which is alleged to be stolen property, the police officer shall give the pawnbroker a receipt for the property which shall contain a description of the property, the reason for seizure, and the names of the pawnbroker and the officer.

history: (History: Added by Stats. 1979, Ch. 1037.)


text:
(a) Notwithstanding the provisions of Chapter 12 (commencing with Section 1407) of Title 10 of Part 2 of the Penal Code, whenever property alleged to have been lost, stolen, or embezzled is taken from a pawnbroker, the peace officer, magistrate, court, clerk, or other person having custody of the property shall not deliver the property to any person claiming ownership unless the provisions of this section are complied with.

(b) (1) If any person makes a claim of ownership, the person shall file a written statement, signed under penalty of perjury, stating the factual basis upon which they claim ownership or an interest in the property with the person having custody of the property, and the person having custody of the property shall notify the pawnbroker of the claim by providing a true and correct copy of the claim to the pawnbroker.

(2) If the pawnbroker makes no claim with respect to the property within 10 days of such notification, the property may be disposed of as otherwise provided by law.

(3) In adjudicating the competing claims of a pawnbroker and a person claiming ownership or an interest in the property seized from a pawnbroker, the adjudicating court shall give due consideration to the effect Section 2403 of the Commercial Code may have on the claims.

(4) At least 30 calendar days before any hearing adjudicating any competing claims of a pawnbroker and a person claiming ownership or an interest in the property, the person having custody of the property shall deliver to the pawnbroker a true and correct copy of the police report, redacted as may be required by law and consistent with due process of law, substantiating the basis of the seizure of the property from the pawnbroker.

(c) If property alleged to have been stolen or embezzled is taken from a pawnbroker, prior to any disposal of the property pursuant to Section 1411 of the Penal Code, the notice to be given to the owner and owner of a security interest pursuant to Section 1411 shall be given to the pawnbroker. Such property shall not be disposed of pursuant to Section 1411 until three months after such notice has been given.

(d) A pawnbroker shall not be liable to any person for any property seized from the pawnbroker on account of the pawnbroker’s inability to return the property to that person because of the seizure.

history: (History: Amended by Stats. 2013, Ch. 318, Sec. 2. (SB 762) Effective January 1, 2014.)


text: No pawnbroker shall receive anything in pledge from any person who is a minor.

history: (History: Amended by Stats. 1989, Ch. 1418, Sec. 4.)


text: A pawnbroker shall comply with the reporting requirements imposed on secondhand dealers under Article 4 (commencing with Section 21625) of Chapter 9 of Division 8 of the Business and Professions Code.

history: (History: Repealed and added by Stats. 2012, Ch. 172, Sec. 8. (AB 391) Effective August 17, 2012.)


text: The violation of any provision of this chapter under circumstances where a person knows or should have known that a violation was being committed is a misdemeanor.

history: (History: Amended by Stats. 1986, Ch. 826, Sec. 7.)


text:
(a) The chief of police, the sheriff, or, where appropriate, the police commission shall accept an application for and grant a license permitting the licensee to engage in the business of pawnbroker, as defined in Section 21000, at the address indicated on the application, to an applicant who has complied with the requirements of Sections 21303, 21303.5, 21304, and 21305 and has not been convicted of an attempt to receive stolen property or any other offense involving stolen property. Prior to the granting of a license, the licensing authority shall submit the application to the Department of Justice. If the Department of Justice does not comment on the application within 30 days thereafter, the licensing authority shall grant the applicant a license. All forms for application and licensure, and license renewal, shall be prescribed and provided by the Department of Justice. A fee shall be charged to the applicant by the Department of Justice, as specified in Section 21642.5 of the Business and Professions Code, for processing the initial license application and funding the single, statewide, uniform electronic reporting system set forth in Section 21628 of the Business and Professions Code. The licensing authority shall collect the fee and transmit the fee to the Department of Justice. In addition, the police chief, sheriff, or, where appropriate, the police commission, may charge a fee to the applicant not to exceed the actual costs incurred to process the application and to collect and transmit the fee charged by the Department of Justice.

(b) For the purposes of this section, “convicted” means a plea or verdict of guilty or a conviction following a plea of nolo contendere.

(c) Notwithstanding subdivisions (a) and (b), no person shall be denied a pawnbroker’s license solely on the grounds that they violated any provision contained in Chapter 1 (commencing with Section 21000) or Chapter 2 (commencing with Section 21200), or any provision contained in Article 4 (commencing with Section 21625) or Article 5 (commencing with Section 21650) of Chapter 9 of Division 8 of the Business and Professions Code, unless the violation demonstrates a pattern of conduct.

(d) This section shall remain in effect only until January 1, 2029, and as of that date is repealed.

history: (History: Amended by Stats. 2024, Ch. 223, Sec. 1. (AB 2231) Effective January 1, 2025. Repealed as of January 1, 2029, by its own provisions. See later operative version added by Sec. 1.5 of Stats. 2024, Ch. 223.)

chapter: 3. Licensure

path: 8. PAWNBROKERS > 3. Licensure


text:
(a) The chief of police, the sheriff, or, where appropriate, the police commission shall accept an application for and grant a license permitting the licensee to engage in the business of pawnbroker, as defined in Section 21000, at the address indicated on the application, to an applicant who has complied with the requirements of Sections 21303, 21304, and 21305 and has not been convicted of an attempt to receive stolen property or any other offense involving stolen property. Prior to the granting of a license, the licensing authority shall submit the application to the Department of Justice. If the Department of Justice does not comment on the application within 30 days thereafter, the licensing authority shall grant the applicant a license. All forms for application and licensure, and license renewal, shall be prescribed and provided by the Department of Justice. A fee shall be charged to the applicant by the Department of Justice, as specified in Section 21642.5 of the Business and Professions Code, for processing the initial license application and funding the single, statewide, uniform electronic reporting system set forth in Section 21628 of the Business and Professions Code. The licensing authority shall collect the fee and transmit the fee to the Department of Justice. In addition, the police chief, sheriff, or, where appropriate, the police commission, may charge a fee to the applicant not to exceed the actual costs incurred to process the application and to collect and transmit the fee charged by the Department of Justice.

(b) For the purposes of this section, “convicted” means a plea or verdict of guilty or a conviction following a plea of nolo contendere.

(c) Notwithstanding subdivisions (a) and (b), no person shall be denied a pawnbroker’s license solely on the grounds that they violated any provision contained in Chapter 1 (commencing with Section 21000) or Chapter 2 (commencing with Section 21200), or any provision contained in Article 4 (commencing with Section 21625) or Article 5 (commencing with Section 21650) of Chapter 9 of Division 8 of the Business and Professions Code, unless the violation demonstrates a pattern of conduct.

(d) This section shall become operative on January 1, 2029.

history: (History: Repealed (in Sec. 1) and added by Stats. 2024, Ch. 223, Sec. 1.5. (AB 2231) Effective January 1, 2025. Operative January 1, 2029, by its own provisions.)


text: It is unlawful for any person who is not duly licensed under this section to act as a pawnbroker or represent himself, herself, or a business entity to be a pawnbroker or a pawnbrokerage business entity.

history: (History: Added by Stats. 1996, Ch. 923, Sec. 8. Effective January 1, 1997.)


text:
(a) A license granted pursuant to Section 21300 shall be renewable the second year from the date of issue, and every other year thereafter, upon the filing of a renewal application, payment of a renewal fee specified by the licensing authority as described in this subdivision, and compliance with the requirements of Section 21303. The Department of Justice shall also require the licensee, in addition to any locally assessed fee as set forth herein, to pay a fee as described in Section 21642.5 of the Business and Professions Code. The licensing authority shall collect the fee and transmit the fee and a copy of the renewed license to the Department of Justice. The police chief, sheriff, or, where appropriate, the police commission may charge a fee not to exceed the actual costs incurred to process the renewal application of the licensee and to collect and transmit the fee charged by the Department of Justice.

(b) The license shall be subject to forfeiture by the licensing authority, and the licensee’s activities as a pawnbroker shall be subject to being enjoined pursuant to Section 21302, for breach of any of the following conditions:

(1) The business shall be carried on only at the location designated on the license. The license shall designate all locations where property belonging to the business is stored. Property of the business may be stored at locations not designated on the license only with the written consent of the local licensing authority.

(2) The license or a copy thereof, certified by the licensing authority, shall be displayed on the premises in plain view of the public.

(3) The licensee shall not engage in any act that the licensee knows to be in violation of this article.

(4) The licensee shall not be convicted of an attempt to receive stolen property or other offense involving stolen property. For the purposes of this paragraph, “convicted” means a plea or verdict of guilty or a conviction following a plea of nolo contendere. Any action that the chief of police, the sheriff, or, where appropriate, the police commission is permitted to take following that conviction may be taken when the time for appeal has elapsed, the judgment of conviction has been affirmed on appeal, or an order granting probation is made suspending the imposition of sentence, irrespective of a subsequent order under Section 1203.4 of the Penal Code.

(c) Notwithstanding subdivisions (a) and (b), no renewal application for a pawnbroker’s license may be denied, nor may his or her pawnbroker’s license be forfeited, solely on the grounds that the applicant violated any provision contained in Chapter 1 (commencing with Section 21000) or Chapter 2 (commencing with Section 21200), or any provision contained in Article 4 (commencing with Section 21625) or Article 5 (commencing with Section 21650) of Chapter 9 of Division 8 of the Business and Professions Code, unless the violation demonstrates a pattern of conduct.

history: (History: Amended by Stats. 2012, Ch. 172, Sec. 10. (AB 391) Effective August 17, 2012.)


text: It is unlawful for any person to advertise his or her services as a pawnbroker, or to use any words or parts of words in any advertisements that connote a transaction involving the taking of tangible personal property as security for a loan unless the pawnbroker’s license number is clearly displayed in the advertisement.

history: (History: Added by Stats. 1996, Ch. 923, Sec. 10. Effective January 1, 1997.)


text: The district attorney or the Attorney General, in the name of the people of the State of California, may bring an action to enjoin the violation or the threatened violation of any regulation made pertaining to the provisions contained in Chapter 1 (commencing with Section 21000) or Chapter 2 (commencing with Section 21200) of this division or Article 4 (commencing with Section 21625) or Article 5 (commencing with Section 21650) of Chapter 9 of Division 8 of the Business and Professions Code. Any proceeding brought hereunder shall be governed in all respects by the provisions of Chapter 3 (commencing with Section 525) of Title 7 of Part 2 of the Code of Civil Procedure.

history: (History: Added by Stats. 1993, Ch. 782, Sec. 4. Effective January 1, 1994.)


text:
(a) As a condition precedent to the issuance or renewal of a pawnbroker’s license the applicant shall file a pawnbroker’s two-year nonrevokable surety bond with the issuing authority, in the sum of twenty thousand dollars ($20,000). The pawnbroker’s bond required by this article shall be executed by an admitted surety in favor of the State of California and shall be filed by the applicant with the licensing authority.

(b) The bond shall be for the benefit of pledgors of pledged property when the property is not available for redemption, due to the criminal negligence, criminal malfeasance, or other criminal conduct of the pawnbroker, and the pledgor has complied with the conditions precedent to redemption under the terms of the loan contract. The pledgor has the burden of establishing by clear and convincing evidence that all conditions precedent to redemption under the terms of the loan contract have been performed.


text:
(a) On and after January 1, 2026, as a condition precedent to issuing a new pawnbroker’s license, the applicant shall complete at least eight hours of prelicensing education approved by the California Pawnbroker Education Council pursuant to Chapter 4 (commencing with Section 21400) and submit to the licensing agency a certificate of completion issued by the council pursuant to Section 21409.

(b) On and after January 1, 2026, as a condition precedent to renewing a pawnbroker’s license, the applicant shall complete at least eight hours of continuing education approved by the California Pawnbrokers Education Council pursuant to Chapter 4 (commencing with Section 21400) and submit to the licensing agency a certificate of completion issued by the council pursuant to Section 21409.

(c) This section shall remain in effect only until January 1, 2029, and as of that date is repealed.

history: (History: Added by Stats. 2024, Ch. 223, Sec. 2. (AB 2231) Effective January 1, 2025. Repealed as of January 1, 2029, by its own provisions.)


text:
(a) As a condition precedent to the issuing of a pawnbroker’s license, the applicant shall file with the issuing authority a financial statement confirming that the applicant has at least one hundred thousand dollars ($100,000) in the form of liquid assets readily available for use in each licensed business for which the application is made, not including real property, or, in the absence of one hundred thousand dollars ($100,000), an applicant may post a nonrevocable surety bond in the amount of one hundred thousand dollars ($100,000) or the applicant may, in lieu of posting a surety bond, deposit money, certificates, accounts, bonds, or notes, as provided in Section 995.710 of the Code of Civil Procedure. The financial statement shall be filed by the applicant under penalty of perjury and signed by a California certified public accountant verifying that he or she has reviewed the financial statement.

(b) This section does not apply to any person holding a secondhand dealer’s license pursuant to Section 21641 or 21642 of the Business and Professions Code who is actively engaged as a pawnbroker on the effective date of this section.

history: (History: Amended by Stats. 1997, Ch. 17, Sec. 40. Effective January 1, 1998.)


text: A license issued pursuant to this chapter shall not be transferred or assigned.


text: A pawnbroker licensed under Section 21300 is exempt from the licensing requirements under Sections 21641 and 21642 of the Business and Professions Code and may engage in any transaction involving tangible personal property for which a secondhand dealers license is required under Sections 21641 and 21642 of the Business and Professions Code. Pawnbrokers operating under this license exemption are required to conform to all other requirements of secondhand dealers for which a license is required under Sections 21641 and 21642 of the Business and Professions Code.


text: Except as otherwise specifically provided, the violation of any provision of this chapter under circumstances where a person knows or should have known that a violation was being committed is a misdemeanor.

history: (History: Added by Stats. 1996, Ch. 923, Sec. 12. Effective January 1, 1997.)


text: This chapter shall be known, and may be cited, as the Pawnbroker Education Act.

history: (History: Added by Stats. 2024, Ch. 223, Sec. 3. (AB 2231) Effective January 1, 2025. Repealed as of January 1, 2029, pursuant to Section 21413.)

chapter: 4. Pawnbroker Education Act

path: 8. PAWNBROKERS > 4. Pawnbroker Education Act


text:
The Legislature finds and declares all of the following:

(a) Pawnbroker businesses provide a valuable source of short-term credit for economically vulnerable consumers and the state’s unbanked population, as everyone who seeks a pawn loan can borrow money regardless of creditworthiness.

(b) Individuals who use pawnbroker loans in this state use those loans for, among other things, paying for the necessities of life.

(c) The Legislature recognizes that education for licensed pawnbrokers, as defined in this chapter, will ensure the highest standards of conduct and compliance with state and federal laws applicable to pawnbroker businesses.

(d) In order to continuously improve the competence of licensed pawnbrokers, the Legislature encourages all licensees to regularly engage in continuing education related to the profession, as defined in this chapter.


text:
(a) The California Pawnbroker Education Council is hereby established to carry out the responsibilities and duties described in this chapter.

(b) The council shall be governed by a board of directors composed of, but not limited to, members who shall be chosen in the following manner:

(1) One member shall be a representative of the California Police Chiefs Association or California State Sheriffs’ Association, unless those entities choose not to appoint a member to the council.

(2) One member shall be appointed by the Secondhand Dealer and Pawnbroker Unit of the Department of Justice, unless the department chooses not to appoint a member to the council.

(3) Four members shall be licensed pawnbrokers who are California residents selected by a professional society, association, or other entity, the membership of which is composed of licensed pawnbrokers. The professional society, association, or other entity shall have a dues-paying membership in California of at least 200 individuals, have been established in or before 2000, and have bylaws that require its members to comply with a code of ethics.

(4) One member shall be a licensed attorney who is a California resident selected by a professional society, association, or other entity described in paragraph (3).

(c) Each member of the board of directors shall serve a term of two years.

(d) The council may take any reasonable actions necessary to carry out the responsibilities and duties set forth in this chapter, including, but not limited to, hiring staff, entering into contracts, and developing policies, procedures, rules, and bylaws to implement this chapter.

(e) The council shall establish fees sufficient to support the functions of the council and to cover the reasonable costs of administering this chapter.


text:
(a) The council shall, on or before January 1, 2026, develop and establish a standard course and curriculum in pawnbroker transactions that shall include at least eight hours of prelicensing education to be taken by an applicant for licensure, and eight hours of continuing education to be taken by a licensee or their designated representative.

(b) The curriculum established by the council shall meet minimum standards for education in the following areas:

(1) Compliance with federal laws applicable to the pawnbroker business, including, but not limited to, bankruptcy, search and seizure, anti-money laundering, and lending laws.

(2) Compliance with state laws applicable to the pawnbroker business (Division 8 (commencing with Section 21000)) and the reporting requirements imposed upon secondhand dealers pursuant to Article 4 (commencing with Section 21625) of Chapter 9 of Division 8 of the Business and Professions Code.

(c) The curriculum may include any other training that the council deems to be relevant to the efficient and lawful operation of a pawnbroker business.


text:
(a) Individuals, entities, agencies, and associations that propose to offer educational courses that satisfy the prelicensing or continuing education requirements of this chapter shall apply for and obtain the approval of the council.

(b) The council shall develop policies, procedures, rules, or bylaws governing the requirements described in this chapter and the process for applying to become, approving, denying the approval of, imposing correction action upon, or withdrawing the approval of, an educational course provider. These policies, procedures, rules, or bylaws shall address topics including, but not limited to, what constitutes an acceptable curriculum and facility requirements.


text:
(a) Beginning on January 1, 2026, the council shall issue a certificate to an applicant for a pawnbroker license, or a licensee applying for renewal of a pawnbroker license, who has satisfied the educational requirements of this chapter.

(b) The council shall maintain records verifying completion of the initial prelicensing education and continuing education for a period of not less than two years.


text: Nothing in this chapter authorizes the council to approve, deny, revoke, or suspend a license issued pursuant to Section 21300.


text: This chapter shall remain in effect only until January 1, 2029, and as of that date is repealed.

history: (History: Added by Stats. 2024, Ch. 223, Sec. 3. (AB 2231) Effective January 1, 2025. Repealed as of January 1, 2029, by its own provisions. Note: Repeal affects Chapter 4, commencing with Section 21400.)


text: This division is known and may be cited as the “California Financing Law.”

history: (History: Amended by Stats. 2017, Ch. 475, Sec. 4. (AB 1284) Effective October 4, 2017.)

division: 9. CALIFORNIA FINANCING LAW

chapter: 1. General Provisions

article: 1. Definitions

path: 9. CALIFORNIA FINANCING LAW > 1. General Provisions > 1. Definitions


text:
(a) This division shall be liberally construed and applied to promote its underlying purposes and policies, which are:

(1) To ensure an adequate supply of credit to borrowers in this state.

(2) To simplify, clarify, and modernize the law governing loans made by finance lenders.

(3) To foster competition among finance lenders.

(4) To protect borrowers against unfair practices by some lenders, having due regard for the interests of legitimate and scrupulous lenders.

(5) To permit and encourage the development of fair and economically sound lending practices.

(6) To encourage and foster a sound economic climate in this state.

(7) To protect property owners from deceptive and misleading practices that threaten the efficacy and viability of property assessed clean energy financing programs.

(b) Consumer loans, as defined in Sections 22203 and 22204, are subject to this chapter, Chapter 2 (commencing with Section 22200), Article 1 (commencing with Section 22700) of Chapter 4, and Article 2 (commencing with Section 22750) of Chapter 4.

(c) Commercial loans, as defined in Section 22502, are subject to this chapter, Chapter 3 (commencing with Section 22500), Article 1 (commencing with Section 22700) of Chapter 4, and Article 3 (commencing with Section 22780) of Chapter 4.

(d) A program administrator, as defined in Section 22018, is subject to this chapter, Chapter 3.5 (commencing with Section 22680), and Article 1 (commencing with Section 22700) of Chapter 4.

(e) This section shall become operative on January 1, 2019.

history: (History: Repealed (in Sec. 5) and added by Stats. 2017, Ch. 475, Sec. 6. (AB 1284) Effective October 4, 2017. Section operative January 1, 2019, by its own provisions.)

article: 1. Definitions


text:
To accomplish its underlying purposes and policies, this division creates a class of exempt persons pursuant to Section 1 of Article XV of the California Constitution.

It is the intent of the Legislature to preserve existing exemptions under Section 1 of Article XV of the Constitution and statutory law for (a) personal property brokers formerly regulated by the Personal Property Brokers Law; (b) lenders formerly regulated by the Consumer Finance Lenders Law; and (c) lenders formerly regulated by the Commercial Finance Lenders Law; and no finding that any provision of this division is invalid with respect to a particular lender or class of lenders shall affect the enforceability of this division with respect to any of the foregoing classifications of lenders, which shall in all events continue to be exempted by this division.

history: (History: Repealed and added by Stats. 1994, Ch. 1115, Sec. 2. Effective January 1, 1995. Operative July 1, 1995, by Sec. 5 of Ch. 1115.)

article: 1. Definitions


text: Unless the context otherwise requires, the definitions given in this article govern the construction of this division.

article: 1. Definitions


text:
“Assessment contract” means an agreement entered into between all property owners of record on real property and a public agency in which, for voluntary contractual assessments imposed on the real property, the public agency provides a PACE assessment for the installation of one or more efficiency improvements on the real property in accordance with a PACE program, specified in paragraph (2) of subdivision (a) of Section 5898.20 of the Streets and Highways Code, or Section 5899, 5899.3, or 5899.4 of the Streets and Highways Code, or a special tax described in Section 53328.1 of the Government Code.

This section shall remain in effect only until January 1, 2029, and as of that date is repealed.

history: (History: Amended by Stats. 2018, Ch. 837, Sec. 2. (SB 465) Effective January 1, 2019. Repealed as of January 1, 2029, by its own provisions. See later operative version added by Stats. 2018, Ch. 837.)

article: 1. Definitions


text:
“Assessment contract” means an agreement entered into between all property owners of record on real property and a public agency in which, for voluntary contractual assessments imposed on the real property, the public agency provides a PACE assessment for the installation of one or more efficiency improvements on the real property in accordance with a PACE program, specified in paragraph (2) of subdivision (a) of Section 5898.20 of the Streets and Highways Code, or Section 5899 or 5899.3 of the Streets and Highways Code, or a special tax described in Section 53328.1 of the Government Code.

This section shall become operative on January 1, 2029.

history: (History: Repealed and added by Stats. 2018, Ch. 837, Sec. 3. (SB 465) Effective January 1, 2019. Section operative January 1, 2029, by its own provisions.)

article: 1. Definitions


text: “Broker” includes any person who is engaged in the business of negotiating or performing any act as broker in connection with loans made by a finance lender.

article: 1. Definitions


text: “Commissioner” means the Commissioner of Financial Protection and Innovation.

history: (History: Amended by Stats. 2022, Ch. 452, Sec. 132. (SB 1498) Effective January 1, 2023.)

article: 1. Definitions


text: As used in this division, the terms “security interest,” “accounts,” “chattel paper,” “documents,” “general intangibles,” “goods,” and “instruments” are as defined in the Uniform Commercial Code.

article: 1. Definitions


text:
(a) “Licensee” means any finance lender, broker, or program administrator who receives a license in accordance with this division.

(b) This section shall become operative on January 1, 2019.

history: (History: Repealed (in Sec. 8) and added by Stats. 2017, Ch. 475, Sec. 9. (AB 1284) Effective October 4, 2017. Section operative January 1, 2019, by its own provisions.)

article: 1. Definitions


text: “Person” means an individual, a corporation, a partnership, a limited liability company, a joint venture, an association, a joint stock company, a trust, an unincorporated organization, a government, or a political subdivision of a government.

article: 1. Definitions


text:
“Finance lender” includes any person who is engaged in the business of making consumer loans or making commercial loans. The business of making consumer loans or commercial loans may include lending money and taking, in the name of the lender, or in any other name, in whole or in part, as security for a loan, any contract or obligation involving the forfeiture of rights in or to personal property, the use and possession of which property is retained by other than the mortgagee or lender, or any lien on, assignment of, or power of attorney relative to wages, salary, earnings, income, or commission.

It is the intent of the Legislature that the definition of finance lender shall be interpreted to include a personal property broker as referenced in Section 1 of Article XV of the California Constitution.

article: 1. Definitions


text:
(a) “Finance lender,” “broker,” and “program administrator” do not include employees regularly employed at the location specified in the license of the finance lender, broker, or program administrator, except that an employee, when acting within the scope of his or her employment, shall be exempt from any other law from which his or her employer is exempt.

(b) This section shall become operative on January 1, 2019.

history: (History: Repealed (in Sec. 10) and added by Stats. 2017, Ch. 475, Sec. 11. (AB 1284) Effective October 4, 2017. Section operative January 1, 2019, by its own provisions.)

article: 1. Definitions


text: A “regulatory ceiling provision” is a statement in a section or subdivision that specifies an original bona fide principal loan amount at or above which that section or subdivision does not apply to a loan.

article: 1. Definitions


text:
(a) “Branch office license” means a license to engage in business as a finance lender or broker at a location other than the location identified in a finance lender or broker license application or amended application.

(b) “Depository institution” has the same meaning as in Section 3 of the Federal Deposit Insurance Act, and includes any credit union.

(c) “Federal banking agencies” means the Board of Governors of the Federal Reserve System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision, the National Credit Union Administration, and the Federal Deposit Insurance Corporation.

(d) “Nationwide Mortgage Licensing System and Registry” means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of licensed mortgage loan originators.

(e) “Residential mortgage loan” means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling, as defined in Section 103(v) of the federal Truth in Lending Act, or residential real estate upon which is constructed or intended to be constructed a dwelling. “Dwelling” means a residential structure that contains one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit, cooperative unit, mobilehome, or trailer, if it is used as a residence.

(f) “SAFE Act” means the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).

(g) “Unique identifier” means a number or other identifier assigned by protocols established by the Nationwide Mortgage Licensing System and Registry.

(h) For purposes of Sections 22109.2, 22109.3, and 22109.5, “nontraditional mortgage product” means any mortgage product other than a 30-year fixed rate mortgage.

(i) For purposes of Section 22109.1, “expungement” means the subsequent order under the provisions of Section 1203.4 of the Penal Code allowing such individual to withdraw his or her plea of guilty and to enter a plea of not guilty, or setting aside the verdict of guilty or dismissing the accusation, information, or indictment. With respect to criminal convictions in another state, that state’s definition of expungement will apply.

history: (History: Amended by Stats. 2012, Ch. 264, Sec. 1. (AB 2666) Effective January 1, 2013.)

article: 1. Definitions


text:
(a) “Mortgage loan originator” means an individual who, for compensation or gain, or in the expectation of compensation or gain, takes a residential mortgage loan application or offers or negotiates terms of a residential mortgage loan.

(b) Mortgage loan originator does not include any of the following:

(1) An individual who performs purely administrative or clerical tasks on behalf of a person meeting the definition of a mortgage loan originator, except as provided in subdivision (c) of Section 22014. The term “administrative or clerical tasks” means the receipt, collection, and distribution of information common for the processing or underwriting of a loan in the mortgage industry and communication with a consumer to obtain information necessary for the processing or underwriting of a residential mortgage loan, to the extent that the communication does not include offering or negotiating loan rates or terms, or counseling consumers about residential mortgage loan rates or terms.

(2) An individual who solely renegotiates terms for existing mortgage loans held or serviced by his or her employer and who does not otherwise act as a mortgage loan originator, unless the United States Department of Housing and Urban Development or a court of competent jurisdiction determines that the SAFE Act requires such an employee to be licensed as a mortgage loan originator under state laws implementing the SAFE Act.

(3) An individual that is solely involved in extensions of credit relating to timeshare plans, as that term is defined in Section 101(53D) of Title 11 of the United States Code.

(4) An individual licensed as a mortgage loan originator pursuant to the provisions of Article 2.1 (commencing with Section 10166.01) of Chapter 3 of Part 1 of Division 4 of the Business and Professions Code and the SAFE Act.

(5) An individual who is an employee of a federal, state, or local government agency or housing finance agency and who acts as a loan originator only pursuant to his or her official duties as an employee of the federal, state, or local government agency or housing finance agency.

(A) For purposes of this paragraph, the term “employee” means an individual whose manner and means of performance of work are subject to the right of control of, or are controlled by, a person, and whose compensation for federal income tax purposes is reported, or required to be reported, on a W-2 form issued by the controlling person.

(B) For purposes of this paragraph, the term “housing finance agency” means any authority:

(i) That is chartered by a state to help meet the affordable housing needs of the residents of the state.

(ii) That is supervised directly or indirectly by the state government.

(iii) That is subject to audit and review by the state in which it operates.

(6) (A) An employee of a bona fide nonprofit organization who exclusively originates residential mortgage loans for a bona fide nonprofit organization, and who acts as a mortgage loan originator only with respect to residential mortgage loans with terms that are favorable to the borrower.

(B) To qualify for the exemption under this paragraph, the bona fide nonprofit organization under this paragraph must register with the department on a form prescribed by the commissioner, along with documentation of all of the following by December 31 of each year:

(i) Status of a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986.

(ii) That the organization promotes affordable housing or provides home ownership education or similar services.

(iii) That the organization conducts its activities in a manner that serves public or charitable purposes, rather than commercial purposes.

(iv) That the organization receives funding and revenue, and charges fees in a manner that does not incentivize the organization or its employees to act other than in the best interests of its clients.

(v) That the organization compensates employees in a manner that does not incentivize employees to act other than in the best interests of its clients.

(vi) That the organization provides to, or identifies for, the borrower residential mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs.

(vii) That the organization is certified by the United States Department of Housing and Urban Development as a housing counselor who engages solely in traditional housing counseling services, if applicable.

(C) The commissioner may periodically require reports regarding the activities of the bona fide nonprofit organization, and shall examine the nonprofit organization’s books and records in accordance with the regulations of the United States Department of Housing and Urban Development, or any successor guidance or requirement by the Consumer Financial Protection Bureau. If the nonprofit organization fails to provide documentation as required by subparagraph (B), or if it does not continue to meet the criteria under subparagraph (B), the commissioner may revoke the nonprofit organization’s status as a registered bona fide nonprofit organization.

(D) For residential mortgage loans to have terms that are favorable to the borrower, the terms shall be consistent with loan origination in a public or charitable context, rather than a commercial context.

(E) In making its determinations and examinations, the commissioner may rely on the receipt and review of:

(i) Reports filed with federal, state, or local housing agencies and authorities.

(ii) Reports and attestations prescribed by the commissioner by rule or order.

(c) “Registered mortgage loan originator” means any individual who is all of the following:

(1) Meets the definition of mortgage loan originator.

(2) Is an employee of a depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the Farm Credit Administration.

(3) Is registered with, and maintains a unique identifier through, the Nationwide Mortgage Licensing System and Registry.

(d) “Loan processor or underwriter” means an individual who performs clerical or support duties as an employee at the direction of, and subject to the supervision and instruction of, a mortgage loan originator licensed by the state or a registered mortgage loan originator.

history: (History: Amended by Stats. 2012, Ch. 264, Sec. 2. (AB 2666) Effective January 1, 2013.)

article: 1. Definitions


text:
(a) A loan processor or underwriter who does not represent to the public, through advertising or other means of communicating or providing information, including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator shall not be required to be licensed as a mortgage loan originator.

(b) An individual engaging solely in loan processor or underwriter activities shall not represent to the public, through advertising or other means of communicating or providing information including the use of business cards, stationery, brochures, signs, rate lists, or other promotional items, that the individual can or will perform any of the activities of a mortgage loan originator.

(c) An independent contractor may not engage in the activities of a loan processor or underwriter for a residential mortgage loan unless the independent contractor loan processor or underwriter obtains and maintains a mortgage loan originator license under this division. Each independent contractor loan processor or underwriter licensed as a mortgage loan originator shall have and maintain a valid unique identifier issued by the Nationwide Mortgage Licensing System and Registry.

history: (History: Added by Stats. 2009, Ch. 160, Sec. 11. (SB 36) Effective October 11, 2009.)

article: 1. Definitions


text: “PACE assessment” means a voluntary contractual assessment, voluntary special tax, or special tax, as described in subdivisions (a), (b), and (c) of Section 26054 of the Public Resources Code.

history: (History: Added by Stats. 2017, Ch. 475, Sec. 12. (AB 1284) Effective October 4, 2017.)

article: 1. Definitions


text:
“PACE program” means a program in which financing is provided for the installation of efficiency improvements on real property and funded through the use of property assessments, as well as other program components defined in this section, established pursuant to any of the following:

(a) Chapter 29 (commencing with Section 5898.10) of Part 3 of Division 7 of the Streets and Highways Code.

(b) The Mello-Roos Community Facilities Act of 1982 (Chapter 2.5 (commencing with Section 53311) of Part 1 of Division 2 of Title 5 of the Government Code).

(c) A charter city’s constitutional authority under Section 5 of Article XI of the California Constitution.

history: (History: Added by Stats. 2017, Ch. 475, Sec. 13. (AB 1284) Effective October 4, 2017.)

article: 1. Definitions


text:
(a) “PACE solicitor” means a person authorized by a program administrator to solicit a property owner to enter into an assessment contract.

(b) “PACE solicitor agent” means an individual who is employed or retained by, and acts on behalf of, a PACE solicitor to solicit a property owner to enter into an assessment contract.

(c) “PACE solicitor” and “PACE solicitor agent” do not include any of the following:

(1) A person employed by a program administrator.

(2) A person, including a home improvement contractor or subcontractor, who does not solicit property owners to enter into assessment contracts.

(3) A person who performs purely administrative or clerical tasks.

(4) A person who advertises a PACE program, if the content of the advertising is created, prepared, or approved by a program administrator, and advertising is subject to, and in compliance with this division.

(5) A person who obtains information regarding prospective applicants for PACE financing, or who provides to a program administrator information regarding prospective applicants for PACE financing, if that information was not obtained in connection with advertising or soliciting a PACE program.

(6) A person who only solicits a property owner to enter into an assessment contract with a person who is not considered a program administrator within the meaning of subdivision (b) of Section 22018.

history: (History: Amended by Stats. 2018, Ch. 813, Sec. 1. (AB 2063) Effective January 1, 2019.)

article: 1. Definitions


text:
(a) “Program administrator” means a person administering a PACE program on behalf of, and with the written consent of, a public agency. “Program administrator” does not include a public agency.

(b) For purposes of this division, “program administrator” does not include a person who meets both of the following conditions:

(1) The person does not administer a PACE program that provides financing for the installation of efficiency improvements on residential property with four or fewer units.

(2) The person does not administer a PACE program that provides financing for the installation of efficiency improvements on real property with a market value of less than one million dollars ($1,000,000).

history: (History: Amended by Stats. 2018, Ch. 813, Sec. 2. (AB 2063) Effective January 1, 2019.)

article: 1. Definitions


text: “Property owner” means all property owners of record on the property subject to the PACE assessment.

history: (History: Added by Stats. 2017, Ch. 475, Sec. 16. (AB 1284) Effective October 4, 2017.)

article: 1. Definitions


text: “Efficiency improvement” means one or more permanent improvements fixed to real property financed through a PACE assessment.

history: (History: Added by Stats. 2017, Ch. 475, Sec. 17. (AB 1284) Effective October 4, 2017.)

article: 1. Definitions


text: “Public agency” means a city, including a charter city, county, city and county, municipal utility district, community services district, community facilities district, joint powers authority, sanitary district, sanitation district, or water district, as defined in Section 20200 of the Water Code, that has established or participates in a PACE program, and utilizes a program administrator.

history: (History: Added by Stats. 2017, Ch. 475, Sec. 18. (AB 1284) Effective October 4, 2017.)

article: 1. Definitions


text:
(a) This division does not apply to any person doing business under any law of any state or of the United States relating to banks, trust companies, savings and loan associations, insurance premium finance agencies, credit unions, small business investment companies, community advantage lenders, California business and industrial development corporations when acting under federal law or other state authority, or licensed pawnbrokers when acting under the authority of that license.

“Community advantage lender” means an entity authorized by the United States Small Business Administration to deliver community advantage loans.

(b) This division does not apply to a check casher who holds a valid permit issued pursuant to Section 1789.37 of the Civil Code when acting under the authority of that permit, and shall not apply to a person holding a valid license issued pursuant to Section 23005 of the Financial Code when acting under the authority of that license.

(c) This division does not apply to a college or university making a loan for the purpose of permitting a person to pursue a program or course of study leading to a degree or certificate.

(d) This division does not apply to a broker-dealer acting pursuant to a certificate then in effect and issued pursuant to Section 25211 of the Corporations Code.

(e) This division does not apply to any person who makes five or fewer loans in a 12-month period, these loans are commercial loans as defined in Section 22502, and the loans are incidental to the business of the person relying upon the exemption.

(f) This division does not apply to any public corporation as defined in Section 67510 of the Government Code, any public entity other than the state as defined in Section 811.2 of the Government Code, or any agency of any one or more of the foregoing, when making any loan so long as the public corporation, public entity, or agency of any one or more of the foregoing complies with all applicable federal and state laws and regulations.

history: (History: Amended by Stats. 2013, Ch. 243, Sec. 1. (AB 1091) Effective January 1, 2014.)

article: 2. Exemptions

path: 9. CALIFORNIA FINANCING LAW > 1. General Provisions > 2. Exemptions


text: This division does not apply to any person who makes no more than one loan in a 12-month period if that loan is a commercial loan as defined in Section 22502.

history: (History: Added by Stats. 2022, Ch. 16, Sec. 4. (SB 577) Effective April 28, 2022.)

article: 2. Exemptions


text:
This division does not apply to the following:

(a) Any nonprofit cooperative association organized under Chapter 1 (commencing with Section 54001) of Division 20 of the Food and Agricultural Code that loans or advances money in connection with any activity mentioned in that chapter.

(b) Any corporation, association, syndicate, joint stock company, or partnership engaged exclusively in the business of marketing agricultural, horticultural, viticultural, dairy, livestock, poultry, or bee products on a cooperative nonprofit basis that loans or advances money to its members or in connection with those businesses.

(c) Any corporation securing money or credit from any federal intermediate credit bank organized and existing pursuant to the provisions of an act of Congress entitled “Agricultural Credits Act of 1923” that loans or advances money or credit so secured.

(d) Any corporation created pursuant to the provisions of Part 5 (commencing with Section 14000) of Division 3 of Title 1 of the Corporations Code.

history: (History: Repealed and added by Stats. 1994, Ch. 1115, Sec. 2. Effective January 1, 1995. Operative July 1, 1995, by Sec. 5 of Ch. 1115.)

article: 2. Exemptions


text:
This division does not apply to any loan of credit made by a person not licensed under this division pursuant to a plan having all of the following characteristics:

(a) Credit cards issued pursuant to a written application and to the plan whereby the organization issuing the cards can acquire those obligations that its members in good standing incur with those persons with whom the organization has entered into written agreements setting forth the plan, and where the obligations are incurred pursuant to those agreements; or whereby the organization issuing the cards can extend credit to its members.

(b) The fee for the credit cards is designed to cover the administrative costs of the plan and is imposed upon the issuance of the card and on annual renewal dates thereafter.

(c) Any charges, discounts, or fees resulting from the acquisition of the charges is paid to the organization issuing the credit cards by the persons, corporations, or associations with whom the organization has entered into written agreements.

article: 2. Exemptions


text: In any proceeding under this law, the burden of proving an exemption is upon the person claiming it.

article: 2. Exemptions


text: This division does not apply to bona fide conditional contracts of sale involving the disposition of personal property when these forms of sales agreements are not used for the purpose of evading this division.

article: 2. Exemptions


text: This division does not apply to premium financing as defined in Section 18563.

history: (History: Added by Stats. 1994, Ch. 1115, Sec. 2. Effective January 1, 1995. Operative July 1, 1995, by Sec. 5 of Ch. 1115.)

article: 2. Exemptions


text: This division does not apply to the California Infrastructure and Economic Development Bank, any program authorized pursuant to Chapter 1 (commencing with Section 14000) of Part 5 of Division 3 of Title 1 of the Corporations Code, or to the California Integrated Waste Management Board.

history: (History: Amended by Stats. 2004, Ch. 225, Sec. 10. Effective August 16, 2004.)

article: 2. Exemptions


text: This division does not apply to any loan that is made or arranged by any person licensed as a real estate broker by the state and secured by a lien on real property, or to any licensed real estate broker when making such a loan. A licensed real estate broker may make a loan secured by a lien on real property for sale to a finance lender or arrange for a loan secured by a lien on real property to be made by a finance lender without obtaining a license under this division.

article: 2. Exemptions


text: This division does not apply to any cemetery broker licensed under the Cemetery Act (Chapter 19 (commencing with Section 9600) of Division 3 of the Business and Professions Code).

article: 2. Exemptions


text: A license to act as a broker under this division does not authorize the licensee to negotiate or perform any act as a broker in connection with loans made or to be made by a lender not licensed as a finance lender under this division.

article: 2. Exemptions


text: This division does not apply to a loan made or arranged by a licensed residential mortgage lender or servicer when acting under the authority of that license.

history: (History: Added by Stats. 1995, Ch. 564, Sec. 6.5. Effective January 1, 1996.)

article: 2. Exemptions


text:
(a) This division does not apply to any nonprofit church extension fund.

(b) For purposes of this section:

(1) “Nonprofit church extension fund” means a nonprofit organization affiliated with a church, that is formed for the purpose of making loans to that church’s congregational organization or organizations for site acquisitions, new facilities, or improvements to existing facilities, purchased for the benefit of the church congregational organization.

(2) What constitutes a “church” shall be determined from the following criteria, none of which has controlling weight: a distinct legal existence; a recognized creed and form of worship; a definite and distinct ecclesiastical government; a formal code of doctrine and discipline; a distinct religious history; a membership not associated with any other religion or denomination; a complete organization of ordained ministers ministering to their congregations; ordained ministers selected after completing prescribed courses of study; a literature of its own; established places of worship; regular congregations; regular religious services; schools for the religious instruction of youth; and schools for the preparation of its ministers.

(3) “Church congregational organization” means a group of individuals who gather for the purpose of practicing the religion or manner of worship promulgated by the church with which the organization is affiliated.

(4) “Site acquisitions” means purchases of land intended for use by a church congregational organization.

(5) “New facilities” means purchases of buildings or structures intended for use by a church congregational organization.

(6) “Improvements” means purchases of materials intended to increase the quality of existing religious sites or facilities.

(c) For purposes of this section, a nonprofit church extension fund shall establish that it is exempt from federal taxation pursuant to Section 501 of Title 26 of the United States Code.

(d) For purposes of this section, no individual may be held responsible for the repayment of any loan made by a nonprofit church extension fund.

history: (History: Added by Stats. 1998, Ch. 469, Sec. 1. Effective January 1, 1999.)

article: 2. Exemptions


text:
(a) This division does not apply to either of the following:

(1) A commercial bridge loan made by a venture capital company to an operating company.

(2) A venture capital investment made by a venture capital company in an equity security issued by an operating company.

(b) For purposes of this section:

(1) “Venture capital company” means a person other than an individual or sole proprietorship that meets all of the following:

(A) Engages primarily in the business of promoting economic, business, or industrial development through venture capital investments or the provision of financial or management assistance to operating companies.

(B) At all times maintains at least 50 percent of its assets in venture capital investments or commitments to make venture capital investments, and maintains or, assuming consummation of the equity investment to which the commercial bridge loan relates, will maintain a material equity interest in the operating company.

(C) Approves each loan made to an operating company through the venture capital company’s board of directors, executive committee, or similar policy body, based on a reasonable belief that the loan is appropriate for the operating company after reasonable inquiry concerning the operating company’s financing objectives and financial situation.

(D) Complies, when making the loan, with all applicable federal and state laws and rules or orders governing securities transactions including, but not limited to, the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, and the Corporate Securities Law of 1968.

(2) “Operating company” means a person that meets all of the following:

(A) Primarily engages, wholly or substantially, directly or indirectly through a majority owned subsidiary or subsidiaries, in the production or sale, or the research or development, of a product or service other than the management or investment of capital. This shall not include any of the following:

(i) A person that is either an individual or a sole proprietorship.

(ii) A person that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies or other entity or person.

(B) Uses all of the proceeds of the commercial bridge loan for the operations of its business.

(C) Approves each commercial bridge loan through its board of directors, executive committee, or similar policy board, in the exercise of its fiduciary duty, based on a reasonable belief that the loan is appropriate for the operating company after reasonable inquiry concerning the operating company’s financing objectives and financial situation.

(3) “Commercial bridge loan” means a loan that meets all of the following criteria:

(A) A loan of a principal amount of five thousand dollars ($5,000) or more, or any loan under an open-end credit program, whether secured by personal property or unsecured, the proceeds of which are intended by the operating company for use primarily for other than personal, family, or household purposes.

(B) Is made with a maturity date not to exceed three years, and in connection with or in bona fide contemplation of, an equity investment in the operating company.

(C) Is secured, if at all, solely by the operating company’s business assets, exclusive of any real property.

(D) Is subject to the implied covenant of good faith and fair dealing under Section 1655 of the Civil Code.

(4) For purposes of paragraph (1), “venture capital investment” is an acquisition of securities in an operating company that a person, an investment adviser of the person, or an affiliated person of either, has or obtains management rights to.

(5) “Equity security” shall have the same meaning as in Section 3(a)(11) of the federal Securities Exchange Act of 1934.

(c) For purposes of paragraph (3) of subdivision (b), for the purposes of determining whether a loan is a commercial bridge loan, a venture capital company may rely on any written statement of intended purposes signed by the operating company. The statement may be a separate statement signed by the operating company or may be contained in another document signed by the operating company, but in each case it shall be approved by its board of directors, executive committee, or similar policy body. The venture capital company may not be required to ascertain that the proceeds of the loan are used in accordance with the statement of intended purposes.

(d) For purposes of subparagraph (A) of paragraph (3) of subdivision (b), the principles set forth in Section 22551 shall be used to determine whether the specified amount of a commercial bridge loan is a bona fide principal amount.

(e) Nothing in this section is intended to abrogate or diminish the application of any other laws that are designed to protect borrowers, including, but not limited to, laws pertaining to licensing, unfair competition, usury, and conflicts of interest.

history: (History: Amended by Stats. 2014, Ch. 68, Sec. 1. (SB 1181) Effective January 1, 2015.)

article: 2. Exemptions


text:
(a) This division does not apply to a franchise loan made by a franchisor to a franchisee or a subfranchisor or by a subfranchisor to a franchisee.

(b) For purposes of this section:

(1) “Franchise” means “franchise,” as defined in Section 31005 of the Corporations Code.

(2) “Franchisee” means “franchisee,” as defined in Section 31006 of the Corporations Code.

(3) “Franchisor” means “franchisor,” as defined in Section 31007 of the Corporations Code.

(4) “Area franchise” means “area franchise,” as defined in Section 31008 of the Corporations Code.

(5) “Subfranchise” means “subfranchise,” as defined in Section 31008.5 of the Corporations Code.

(6) “Subfranchisor” means “subfranchisor,” as defined in Section 31009 of the Corporations Code.

(7) “Franchised business” means a business operated pursuant to a franchise or area franchise by a franchisee or pursuant to a franchise, area franchise or subfranchise by a subfranchisor.

(8) “Franchise loan” means a commercial loan, as defined in Section 22502, made by a franchisor to a current or prospective franchisee or subfranchisor or a commercial loan by a subfranchisor to a current or prospective franchisee for the acquisition, construction, operation, development, equipping, expansion, contraction, consolidation, merger, recapitalization, reorganization, or termination of a franchised business provided that the following conditions are satisfied:

(A) The franchisor or subfranchisor making the franchise loan shall comply with all applicable federal and state franchise disclosure and registration laws, regulations, rules and orders, including, but not limited to, the California Franchise Investment Law (Division 5 (commencing with Section 31000) of Title 4 of the Corporations Code) and the Federal Trade Commission Franchise Rule: Disclosure Requirements and Prohibitions Concerning Franchising and Business Opportunity Ventures (Code of Federal Regulations, Title 16, Chapter 1, Subchapter D, Part 436 (16 CFR 436), as amended) in connection with the offer or sale of any franchise, area franchise, or subfranchise to which the franchise loan relates.

(B) The proceeds of the franchise loan are intended by the borrowing franchisee or subfranchisor for use primarily for other than personal, family, or household purposes.

(C) The loan, if secured, is secured solely by the assets of the franchised business to which the franchise loan relates. Property used by the borrower primarily for personal, family, or household purposes, including the borrower’s personal residence, shall not be taken as security for the loan.

(D) The loan is subject to the implied covenant of good faith and fair dealing under Section 1655 of the Civil Code.

(E) The lender shall fully and clearly disclose to the borrower, at or before the time the loan is made, the rates of interest, charges, and costs of the loan.

(c) For purposes of subparagraph (B) of paragraph (8) of subdivision (b), a lending franchisor or subfranchisor may rely on any written statement of intended purposes by the borrowing franchisee or subfranchisor. The statement may be a separate statement signed by the borrowing franchisee or subfranchisor or may be contained in another document signed by the borrowing franchisee or subfranchisor. The lending franchisor or subfranchisor may not be required to ascertain that the proceeds of a franchise loan are used in accordance with the statement of intended purposes.

(d) Nothing in this section is intended to abrogate or diminish the application of any other laws that are designed to protect borrowers, including, but not limited to, laws pertaining to licensing, unfair competition, usury and conflicts of interest.

history: (History: Added by Stats. 2004, Ch. 458, Sec. 16. Effective September 10, 2004.)

article: 2. Exemptions


text:
(a) This division does not apply to the following:

(1) A program-related investment defined in subsection (c) of Section 4944 of the Internal Revenue Code and United States Treasury Regulations Section 53.4944-3 that is made by a private foundation, tax-exempt organization within the meaning of Section 509(a) of the Internal Revenue Code.

(2) A loan, guaranty, or investment made by a public charity, tax-exempt organization within the meaning of paragraph (1), (2), or (3) of subsection (a) of Section 509 of the Internal Revenue Code that meets all of the following requirements:

(A) The primary purpose of the loan, guaranty, or investment is to accomplish one or more of the exempt purposes of the public charity making the loan, as described in Section 170(c)(2)(B) of the Internal Revenue Code.

(B) Neither the production of income nor the appreciation of property is a significant purpose of the loan, guaranty, or investment.

(C) No purpose of the loan, guaranty, or investment is to accomplish one or more of the purposes described in Section 170(c)(2)(D) of the Internal Revenue Code.

(b) Subdivision (a) shall not exempt from the provisions of this division a tax-exempt organization that is making consumer loans as defined in Sections 22203 and 22204.

(c) A loan that is secured by any assets owned by an individual shall be exempt under subdivision (a) only if the individual providing the security is an “accredited investor” as defined in paragraph (5) or (6) of subsection (a) of Section 230.501 of Title 17 of the Code of Federal Regulations. Property held by an individual for personal, family, or household purposes, including an individual’s personal residence, may not be taken as security for a loan.

(d) A program-related investment by a private foundation, and any loan, guaranty, or investment made by a public charity that is exempt under subdivision (a) is subject to the implied covenant of good faith and fair dealing under Section 1655 of the Civil Code.

(e) (1) Subdivision (a) shall exempt from the provisions of this division a program-related investment by a private foundation, or a loan, guaranty, or investment by a public charity, only if the following conditions are satisfied:

(A) The organization making the program-related investment, loan, guaranty, or investment is exempt from federal income taxes under Section 501(c)(3) of the Internal Revenue Code and is organized and operated exclusively for one or more of the purposes described in Section 501(c)(3) of the Internal Revenue Code.

(B) No part of the net earnings of the organization making the program-related investment, loan, guaranty or investment inures to the benefit of a private shareholder or individual.

(C) No broker’s fee will be paid in connection with the making of the program-related investment, loan, guaranty, or investment or placement of the program-related investment, loan, guaranty or investment.

(2) This subdivision does not prohibit the organization making the program-related investment, loan, guaranty, or investment from charging interest on the loan or investment or fees on the guaranty.

(f) Subdivision (a) shall only exempt from the provisions of this division a program-related investment by a private foundation or a loan, guaranty, or investment by a public charity that is made for the primary purpose of accomplishing one or more of the organization’s exempt purposes described in Section 501(c)(3) of the Internal Revenue Code, and no significant purpose of which is the production of income or the appreciation of property within the meaning of subsection (c) of Section 4944 of the Internal Revenue Code. A recipient shall be required to use all funds received from the private foundation or the public charity only for the charitable purposes for which the program-related investment, loan, guaranty, or investment was made.

(g) Subdivision (a) shall only exempt from the provisions of this division a program-related investment by a private foundation or a loan, guaranty, or investment by a public charity if the organization consummates not more than 35 loans in a calendar year. In the making and negotiating of these loans, the private foundation or public charity shall take into consideration the financial ability of the recipients to repay the loans in the time and manner provided.

(h) Nothing in this section is intended to abrogate or diminish the application of any other applicable laws that are designed to govern the tax-exempt organizations described in subdivision (a), including, but not limited to, laws pertaining to recordkeeping and reporting to the Attorney General and the Internal Revenue Service or to protect borrowers, including, but not limited to, laws pertaining to licenses, unfair competition, usury, and conflicts of interest.

history: (History: Amended by Stats. 2009, Ch. 103, Sec. 1. (AB 401) Effective January 1, 2010.)

article: 2. Exemptions


text:
(a) Persons not subject to this division may apply to the commissioner for an exempt company registration for the purpose of sponsoring one or more individuals required to be licensed as mortgage loan originators pursuant to the federal SAFE Act.

(b) An exempt person applying under the exempt company registration procedure shall comply with all rules and orders that the commissioner deems necessary to ensure compliance with the federal SAFE Act and shall pay an annual registration fee established by the commissioner.

(c) (1) A mortgage loan originator who is an insurance producer eligible for licensure pursuant to this section shall meet all of the following requirements:

(A) Be covered under an exclusive written contract with, and originate mortgage loans solely on behalf of, that exempt person.

(B) Hold a current insurance producer license under Article 3 (commencing with Section 1631) of Chapter 5 of Part 2 of Division 1 of the Insurance Code that is not suspended or revoked.

(C) Have a current notice of appointment under Article 9 (commencing with Section 1702) of Chapter 5 of Part 2 of Division 1 of the Insurance Code from an insurer that controls, is controlled by, or is under common control with that exempt person.

(2) A licensed mortgage loan originator who is an insurance producer for an insurer authorized to do business in this state may originate loans on behalf of a person registered pursuant to subdivision (a) or on behalf of a licensed finance lender that originates loans exclusively for a single person that is not subject to licensure pursuant to subdivision (a) of Section 22050.

history: (History: Amended by Stats. 2012, Ch. 264, Sec. 3. (AB 2666) Effective January 1, 2013.)

article: 2. Exemptions