Pawnbroking

Pawnbrokers and second-hand dealers

What is a pawnbroker?

A pawnbroker lends money on the condition that the owner leaves goods with them until the loan, interest and any other fees and charges are repaid. By law, pawnbrokers must hold a pawnbrokers licence issued by NSW Fair Trading.

What is a second-hand dealer?

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 must also be licensed with NSW Fair Trading.

What should I be aware of before dealing with a pawnbroker?

You should only deal with pawnbrokers licensed by NSW 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 include:

  • the name of the licensed pawnbroker, licence number and category
  • what all the fees and charges are including interest rates
  • a statement advising 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.

What information must I give to a pawnbroker?

You must provide the pawnbroker with evidence that you own the goods you offering for sale or pawn as well as a detailed description of the goods. The pawnbroker will give you a statement to fill out with this information known as 'Form 1 - Statement by customer as to who is the owner of goods sold or pawned'. The information you provide must be legible. You can get a Form 1 at a NSW Service Centre or download it from the business licensing forms page on our website.

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

What information must a pawnbroker give me?

When you pawn goods you make a pawn agreement with the pawnbroker. When you do this, a pawnbroker must give you a copy of the pawn ticket (the receipt of your pawn agreement) and four notices.

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 2, the Rights and Obligations of a Pawnbroker. You can get one at a Service NSW Centre or download it from the <forms page> on our website.

Redemption of goods

What is the time limit for redeeming pawned goods?

You must redeem your goods within three months from the date they were pawned. You may be able to negotiate a longer period with the pawnbroker. Get any extensions in writing.

Once the redemption period is finished, you can 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 want to redeem your goods because they haven’t been sold or consigned for auction, the pawnbroker cannot charge you interest for the time after the end of the redemption period. The pawnbroker can charge a safekeeping fee as long as it’s not greater after the end of the redemption period than it was during.

Can I extend my redemption period?

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 someone who is entitled to redeem the goods or you can authorise a person on your behalf.  The pawnbroker must make a record of the 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
  • include 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.

How do I redeem my goods?

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 showing evidence of your identity and completing a declaration that you are the owner of the goods.

You can choose a representative to collect the goods but you must give them authority in writing. They can also produce some other evidence, such as a death certificate, to show that the owner is unable to sign an authority and can’t redeem the goods themselves.

If the pawnbroker does not return the goods, you can go to the local Police and complain as the pawnbroker is in breach of the Pawnbrokers and Second-hand Dealers Act. This will usually involve court action.

You can also make a claim with the NSW Civil and Administrative Tribunal. You’ll need some proof of the value of the goods.

What happens to unredeemed goods?

If you are lent more than $100 for the goods you pawn and you don’t redeem them in the three month period (or an agreed longer period), the pawnbroker can sell the goods. This could be either off the shelf in their premises, at auction in their premises, or by auction elsewhere.

Pawned goods attract interest and if unpaid will frequently owe more money then they were originally pawned for.

The original owner who failed to pay off the loan/pawn has 12 months to claim the excess as the Pawnbroker is not entitled to make a profit in excess of the loan, reasonable costs (storage is common but may include others) and interest.

If the item sold for more than $50 more than the whatever is owed on it the pawnbroker is obligated to send a letter by registered mail to the original owner to the address supplied at the time of pawning the goods telling them they have 12 months to come get their money or it is forfeit.

Stolen goods

Who has title to stolen goods?

Title and ownership of the goods remains with the owner that had the goods stolen or sold without their permission. The buyer of stolen goods does not get title nor ownership of the good.

How do I recover my stolen goods?

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 should also have a sign on display with this information.

If you’ve reported the theft or unlawful dealings of your goods to the Police on an earlier occasion, then you must provide Police with evidence that you owned the goods or a make a statutory declaration that the goods are yours

If the Police Officer has no reason to suspect that the documents or statements are false or misleading, then they can serve the pawnbroker with a Restoration Notice. Once they are served, the pawnbroker has 28 days to either return the goods to the claimant or lodge an application to have the matter resolved by the NSW Civil and Administrative Tribunal.

The pawnbroker must hold onto the goods until the matter is resolved. If criminal proceedings, in relation to the theft of the goods begin, the Police will notify the pawnbroker and again they will hold onto the goods. If no decision is made about ownership during those proceedings, the 28 day period will begin after the proceedings end.

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