Pawnshops and Civil Liability

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What is a Pawnshop?

A pawnshop is a store where personal loans are made in exchange for property as security.  Generally, pawnshops also offers that personal property up for sale to the public as well.

When Can a Pawnshop be Civilly Liable?

Generally speaking, a pawnshop can be civilly liable to a person who uses the store for a personal loan in three situations:

Third Person Theft/Lost Property

A pawnshop has usually taken ownership of the property in question as security for a loan.  As such, a pawnshop cannot be liable for losing, or having its own property stolen by a third person.  Most states have said that pawnshops have to take "ordinary care and diligence" in safeguarding the property.  If the pawnshop is negligent in losing or allowing the property to be stolen by a third person, then it is liable to the customer who sold the property if they desire it back.

Pledge Contract

Some personal loans for personal property exchanges come with a pledge contract.  A pledge contract means that a pawnshop must notify the former owner of the property if it is going to be offered for sale to the public.  If a pledge contract exists, a pawnshop will be liable for stolen or lost property without regard to the general principles of bailment if the former owner desires the property back.  Additionally, if the former owner of the property tenders money to get the property back and the pawnshop fails to provide, the property is seen as stolen and the pawnshop is liable.

Employee Theft

If an employee of a pawnshop steals property, the pawnshop is liable to the former owner of the property if they desire the property again.

Do I Need an Attorney for a Civil Liability Pawnshop Issue?

If you believe a pawnshop is civilly liable to you, or you own a pawnshop and someone else is claiming that you are civilly liable to them, it is highly recommended for you to contact an attorney.  Only they will be able to explain the issues and help protect your rights.

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Last Modified: 10-25-2011 02:57 PM PDT

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