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Pawnshop regulations

A pawnbroker is someone who is in the business of lending money by purchasing tangible personal property from a seller, with the understanding that the property will be redeemed or repurchased by the seller in an allotted amount of time.

Pawnshops are business establishments in which pawnbrokers conduct this sort of business. Pawnshops must adhere to certain regulations to conduct business.

General Regulations

In general, pawnshops are places of business that have a clean, healthy and safe environment.

No illegal activity is allowed in these establishments and they are required to have substantial insurance coverage. Some states require shops to have up to £650,000 of liability insurance.

Occupational License

All pawnshop owners obtain an occupational license with which to operate.

Time limit on procurement of license varies by state, but owners must have the license before opening a pawnshop.

An occupational license is required to be under the specified owner’s name.

Owners cannot have a felony or misdemeanour conviction that is directly related to duties and responsibilities of operating a pawnshop. For example, pawnbrokers cannot have a weapons charge.

Disposal of Goods

A pawnbroker in a pawnshop is not allowed to sell or discard articles within seven days of purchase from a seller. He may only sell it back to the seller within this time period. Gold, silver, diamonds, or other gems of value cannot be removed from the shop and be melted or cut by the owner within seven days of a sell. If a seller defaults on a sell to the pawnshop, the owners can only put the item up for sale to the public after 60 days of default.

Record Keeping

Every pawnshop must keep specific and consistent records.

Record keeping includes reporting time, date and place of purchase for each item coming into the shop. If conducting business with a dealer, the pawnshop is required to have the name of the dealer or person acting on behalf of dealer. The shop records the name, age and address of each seller. Pawnshops must confirm identification of each seller’s driver’s license, state identification or other proper form of identification. Record keeping includes recording a detailed description of items being sold, including identifying numbers or marks.


Pawnshops must issue a detailed receipt to sellers and have an additional copy for the register. Receipts are issued at no charge to the seller.


Business cannot be conducted with individuals under the age of 17 without a written and signed consent from parent or guardian. Consents must be kept on file at all times.


Signs for the pawnshop building must be purchased from the planning and zoning administrator. These signs are affixed to the actual facility where business is conducted.

Geographic Limitations

Depending on state regulations, a pawnshop cannot be established or expanded so many feet into a residential zoning district. Some states regulate 750ft. or more. This regulation protects character and preserves the value of residential and commercial areas.

Shops are not to be within so many feet of a church property line, school, public park or another pawnshop. Distances vary by state.