"An Act relating to the disposition of unredeemed property; and providing for an effective date. "
"SB 315 restores the ratio that was originally established between pawn loan limits and unredeemed property."
- Sen. Cowdery
Pawns are collateralized loans whereby an individual borrows money against an item (TV, tool, piece of jewelry) and leaves the item with the pawnshop. The pawner (individual bringing item in) has 60 days to make an interest payment or pay off their loan. Failure to do so results in an unredeemed pawn item, which becomes the property of the pawnshop and can be sold.
How unredeemed property is currently handled can be best explained by this scenario: A pawnshop takes a piece of jewelry in for the maximum pawn loan limit of $500 - the pawner fails to make interest payments or pay off the loan by the 60 day mark. The pawnshop then sells the jewelry for $700. Currently, the pawnshop would owe the pawner 50% of the extra $300 profit from the $700 sale. ($700 sale less $400 unredeemed prop max ) This is the part of the statute SB 315 will change.
Pawn loan limits have been regulated by statute since 1949. Since that time the issue has been revised twice, with the last time being 13 years ago in 1993. The sale of unredeemed property has been regulated by statute since 1981. Two different issues are raised with these statutes. The first is the pawn limit, which is the maximum amount that can be loaned on any single item. The second is the handling of unredeemed property.
In the following chart you will see that the pawn loan limit has been raised over the years, obviously with the value of a dollar and the consumer price index this change has been necessary. In 1993 when the pawn loan limit was raised, the unredeemed property provision remained the same, causing a disparity in the pawn loan limit to the unredeemed property amount.
SB 315 restores the ratio that was originally established between pawn loan limits and unredeemed property. It does not change the $500 pawn loan limit, but changes the language regarding the sale of unredeemed property from $400 to $1000, or twice the pawn loan limit, as was previously the standard set in 1981.