A pawnbroker lends money on the condition that the borrower leaves goods that will be returned when the loan, interest and any other fees and charges are repaid. By law, pawnbrokers must hold a pawnbrokers licence issued by the Office of Fair Trading.

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A second-hand dealer is a person who buys or sells used goods or unused goods that have been purchased by a third party for the owner (for example, an unwanted gift). Second-hand dealers who deal in prescribed second-hand goods must also be licensed with Fair Trading.

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Pawnbrokers must comply with laws that protect consumers. You should only deal with pawnbrokers licensed by the Office of Fair Trading. If you pawn any of your goods you will need to enter into a pawn agreement.

By law all licensed pawnbrokers must display certain signs in their premises which are visible to customers and which includes:

• the name of the licensed pawnbroker, licence number and category
• what all the fees and charges are including interest rates
• that information provided to them will be given to the police.

They must also have a sign on display with the following information:

“You have the legal right to claim goods from these premises that you have a good reason to believe are yours. Go to any Police Station and a police officer will advise you of your rights and what you will need to do.”

You must provide the pawn broker with authentic evidence as to who owns the goods that you are offering for sale or pawn. The pawn broker must give you a statement to fill out with this information known as Form 2. The Form 2 can be a separate document or can be incorporated into another document.

If you are a representative selling or pawning goods on behalf of the owner you will need authentic evidence from the owner that you can legally act on their behalf.

When you pawn goods you make a pawn agreement with the pawnbroker. When you do this a pawnbroker must give you (the pawner) a copy of the pawn ticket (the receipt of your pawn agreement) and four notices that include the information set out below when the record is made.

A pawn ticket must include the following information:

• a description of the goods
• any serial numbers or other identifying numbers and any hallmark, inscription or engraving of every component
• the total amount lent on the goods
• the rate of interest charged and the period of the loan
• any other charges
• an equivalent annual interest rate
• the name, residential address and date of birth of the owner of the goods and any agent through whom they were pawned
• the date that the pledge and the agreement was signed.

The following notices must accompany a pawn ticket.

• a notice about fees and charges specifying:
  • fees and charges that are (or may become) payable, including those that are (or may become) deductible from the proceeds of the sale of the goods
  • the amount of the fees and charges (so far as they are known)
  • how the fees and charges will be calculated (if the amounts are not known)
• a notice regarding interest charges that states:
  • that the pawner has the option of paying interest monthly if the interest period is going to be greater than a month
  • the agreed frequency of interest charges and when they are payable (for example, on a Friday or on the 20th of the month)
• a notice about the redemption (return upon repayment) of pawned goods specifying the following:
  • the method(s) by which goods will be sold if they are not redeemed
  • whether goods can be redeemed separately if the pawn ticket covers more than one item
  • the address of the premises where the goods will be held during the redemption period
  • the date the redemption period ends
• a notice of a pawners rights and obligations. This notice is called Form 3, the Rights and Obligations of a Pawnbroker and can be downloaded from the Forms page or obtained from a Fair Trading Centre.

By law you may redeem your goods at any time within three months from the date they were pawned. However, the pawnbroker must give you a minimum of three months to redeem your goods. You may be able to negotiate a longer period if the pawnbroker agrees to this. You will need to enter an extension of your agreement in writing.

Once the redemption period is finished, you may still redeem your goods at any time until they are either sold or consigned for auction.

If there has been no agreement to extend the redemption period and you wish to redeem your goods because they haven’t been sold or consigned for auction, then the pawnbroker cannot charge you interest for the time after the end of the redemption period. The pawn broker can charge a safekeeping fee as long as it is not greater after the end of the redemption period than it was during. (This must be on the signage about fees and charges and in your original agreement).

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You and the pawnbroker can agree to extend the redemption period even if the original redemption period has expired. This can also be done by anyone else who is entitled to redeem the goods. If you are unable to extend the agreement yourself, you can provide an authority to someone who can do it on your behalf.

The pawn broker must make a record of the extending agreement and provide you with a copy. The agreement must:

• include an identifying reference to the original agreement which must be attached or incorporated in it
• include the new redemption period
• the date the extending agreement was entered into
• specify any new or varied rates, fees or charges
• be signed by the pawner or the person extending the agreement for the pawner.

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If you still have your pawn ticket, you should return to the pawnbroker and ask to see the licensee of the business.

If you don’t have your pawn ticket, you can still redeem your goods by producing acceptable evidence of your identity and completing a declaration that you are the owner of the goods.

A representative for the owner can produce an authority from the owner to redeem the goods. They can also produce some other evidence, such as a death certificate, which would indicate that the owner is unable to sign an authority and is unable to redeem the goods themselves.

If the pawnbroker does not return the goods you are entitled to go to the local Police and complain as the pawnbroker is in breach of the Act. This will usually involve court action.

Alternatively, you may make a claim with the Consumer, Trader and Tenancy Tribunal against the pawnbroker for breach of contract. You will need some proof of the value of the goods.

If you are lent more that $50 for the goods you pawn and you don’t redeem them in the three month period (or an agreed longer period), the pawnbroker must sell the goods in a way that will reasonably attract the best price possible. This could be either off the shelf in their premises, at auction in their premises, or by auction elsewhere.

This applies to goods that were forfeited before 31 March 2005 and had not yet been sold and also to pawn agreements entered into before this date.

If any article you pawned is sold for more than the full amount of your loan and the interest that was due, the surplus amount less any reasonable costs associated with the sale must be paid on demand to you (or a representative claiming on your behalf), if claimed within 12 months after the sale.

If the surplus is more than $50 then the pawnbroker must send you a notice by registered mail within 21 days of the sale, notifying you that you have a surplus to collect and 12 months in which to do it.

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By law, title and ownership of the goods remains with the owner who the goods were stolen from or sold without permission. The buyer of stolen goods does not get title nor ownership of the good.

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When you inform a pawnbroker that they have goods that are your property, the pawnbroker must advise you to go to a Police station. The pawnbroker must also have a sign on display in each of their business premises with this information.

If you have reported the theft or unlawful dealings of your goods to the Police on an earlier occasion, then you (the claimant) must then provide Police with documentary evidence of ownership or a statutory declaration and make a written claim to the Police that you are the owner of the goods and that the goods have been stolen or otherwise unlawfully dealt with.

If the Police Officer has no reason to suspect that the documents or statements are false or misleading in a material particular, then they may serve the pawnbroker with a Restoration Notice.

Upon being served with a restoration notice a pawnbroker has 28 days to either return the goods to the claimant or lodge a hearing to have the matter resolved with the Consumer, Trader and Tenancy Tribunal.

The pawnbroker must retain the goods, unaltered until the matter is resolved. If criminal proceedings in relation to the theft of the goods are commenced, the Police will notify the pawnbroker of that commencement and the goods must be retained unaltered until those proceedings are completed. If no decision is made about ownership of the goods during those proceedings, the 28 day period will carry on at the conclusion of those proceedings.

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