Did a secondhand dealer need registration in the county where it appraised gold collateral for a third-party lender when acquisition occurred after default elsewhere?

Plain-English summary

A customer delivered a gold necklace at a lender's County A location as collateral for a third-party loan. The dealer appraised it there, but the parties' agreement required the necklace to be delivered to and stored at the dealer's registered County B store.

The dealer did not purchase the necklace when the loan was made. It acquired the gold only if the customer defaulted and the lender notified the dealer, which occurred while the property was held in County B.

The Department therefore found no additional County A secondhand-dealer registration requirement. The dealer still had to submit the transaction form to County B law enforcement within 24 hours after acquisition and hold the necklace for 15 calendar days before disposition.

What this means for you

Physical appraisal or receipt of collateral is not necessarily the statutory purchase. Contract terms, storage location, default, and the moment title changes determine the relevant registered location.

Common questions

Was the necklace purchased when pledged? No.

Where did acquisition occur? At the registered County B store upon default.

What County B duties remained? The 24-hour transaction report and 15-day holding period.

Citations and references

• Fla. Stat. §§ 538.03 and 538.09, as cited in the advisement.

Source

• Landing page: Florida Tax Law Library
• Advisement: TAA 12A-004

Original ruling text

SUMMARY
QUESTIONS: Is Dealer of Lender’s loan process required to have a Florida Department of Revenue
Secondhand Dealer’s registration to operate at Lender’s store located in County A?
ANSWER: Dealer is not required to register as a secondhand dealer in County A because the purchase of
secondhand goods take place in County B and Dealer is registered as a secondhand dealer in County B.
Although Dealer receives secondhand goods in County A, the secondhand goods are pledged as collateral
for a loan issued by a third party lender. By the terms of the contract, the secondhand goods are delivered
and held at Dealers secondhand store located in County B. Upon full payment of the loan, the secondhand
goods are returned to its owner. Dealer does not purchase the secondhand goods until the person
receiving the loan defaults on the payments. When this default occurs, the purchase of the secondhand
goods takes place in County B.

January 23, 2012

XXX
XXX
XXX
Re:

Technical Assistance Advisement 12A-004
Secondhand Dealers and Secondary Metals Recyclers
Registration Requirements
Sections: 538.03, and 538.09, Florida Statutes (F.S.)

Dear
This is in response to your request dated November 3, 2011, for a Technical Assistance Advisement
(TAA) pursuant to Section 213.22, F.S., and Rule Chapter 12-11, F.A.C., regarding a requirement to
register as a secondhand dealer. An examination of your letter has established that you have complied with
the statutory and regulatory requirements for issuance of a TAA. Therefore, the Department is hereby granting
your request for a TAA.
Background
The request for a Technical Assistance Advisement is from a law enforcement officer located in XXX.
The parties to the transaction are:

1. XXX (“Lender”), located in XXX (hereinafter County A), is in the business of providing loans to
   consumers and accepts gold as collateral for the loan.
2. XXX (“Dealer”) is a licensed secondhand dealer in XXXX (hereinafter County B.)
3. XXX (“Customer”).
   The officer provided the following documents:

1.
2.
3.
4.

Request for Technical Assistance Advisement – Exhibits A-1 and A-2.
Consumer Loan and Security Agreement – Exhibits B- and B-2.
Federal Truth in Lending Disclosure Statement – Exhibits C1 and C-2.
Deposit and Bailment Agreement between all three parties, Lender, Dealer, and Customer –
ExhibitsD1 and D2.

5. Secondhand dealer’s property form – Exhibit D-3.
6. Bill of Sale – Exhibit D-4.
   You state that on July 26, 2011, Customer entered Lender’s location at XXX with a gold necklace.
   Customer turned the gold necklace over to a representative of Dealer, who appraised the gold necklace
   and created a deposit and bailment agreement between Customer, Dealer, and Lender. All parties signed
   the agreement, and Customer placed his right thumb print on an approved State of Florida Secondhand
   Dealer’s Property Form. Dealer maintained possession of Customer’s necklace and stored it at its location
   in County B pursuant to the Deposit and Bailment Agreement. Dealer provided Lender with the Deposit
   and Bailment Agreement. Lender then provided Customer with the loan agreement, the truth in lending
   disclosure statement, the payment schedule, and a check in the amount of $206.40. The gold necklace is
   held as collateral by Dealer for the duration of the loan at its location in County B. In the event Customer
   satisfies the loan, the gold necklace is returned to Customer. In the event Customer defaults on the loan,
   Dealer purchases the gold necklace, and will apply the net proceeds of the sale of the gold necklace first to
   the amount due to Lender; any balance of the net proceeds thereafter shall be returned to Customer.
   Dealer does not have a valid secondhand dealer’s registration for County A (XXX).
   You ask if Dealer is required to have a secondhand dealer’s registration to operate at Lender’s store
   located in XXX (County A).
   Applicable Authority
   The following passages from the Florida Statutes are pertinent to the issue under consideration.
   Section 538.03(1), F.S., provides pertinent definitions and states:
   (a) "Secondhand dealer" means any person, corporation, or other business organization or entity
   which is not a secondary metals recycler subject to part II and which is engaged in the business of
   purchasing, consigning, or trading secondhand goods.
   (b) "Precious metals dealer" means a secondhand dealer who normally or regularly engages in the
   business of buying used precious metals for resale. The term does not include those persons
   involved in the bulk sale of precious metals from one secondhand or precious metals dealer to
   another. . . .
   (f) "Secondhand goods" means personal property previously owned or used, which is not
   regulated metals property regulated under part II and which is purchased, consigned, or traded as
   used property. Such secondhand goods do not include office furniture, pianos, books, clothing,
   organs, coins, motor vehicles, costume jewelry, cardio and strength training or conditioning
   equipment designed primarily for indoor use, and secondhand sports equipment that is not

permanently labeled with a serial number. For purposes of this paragraph, "secondhand sports
equipment" does not include golf clubs. . . .
(h) "Precious metals" means any item containing any gold, silver, or platinum, or any
combination thereof, excluding any chemical or any automotive, photographic, electrical, medical,
or dental materials or electronic parts.
Subsection 538.09(1), F.S., provides in part:
(1) A secondhand dealer shall not engage in the business of purchasing, consigning, or trading
secondhand goods from any location without registering with the Department of Revenue. . . . If a
secondhand dealer is the owner of more than one secondhand store location, the application must
list each location, and the department shall issue a duplicate registration for each location. . . .
Discussion and Response
To determine if Dealer is required to obtain a registration as a secondhand dealer in County A, it must be
determined that Dealer meets the definition of a secondhand dealer and is purchasing, consigning, or
trading secondhand goods in that county. A secondhand dealer is defined as any person engaged in the
business of purchasing, consigning, or trading secondhand goods. Secondhand goods include only those
items that were previously owned, or used, which are purchased, consigned, or traded as used property.
The term “precious metals dealer,” as defined in section 538.03(1)(b), F.S., would apply to any person that
is in the business of purchasing precious metals for resale. Precious metals are any item containing any
gold, silver, or platinum, or any combination thereof, excluding any chemical or any automotive,
photographic, electrical, medical, or dental materials or electronic parts. The gold necklace is a precious
metal as defined in Section 538.03(1)(h), F.S., and based on the information provided in the Consumer
Loan and Security Agreement, exhibit B-2, Dealer would purchase the gold necklace at the moment of
default by Customer having provided the gold necklace to Dealer as collateral for a loan issued by Lender.
This purchase action by Dealer meets the definition of a secondhand dealer and would require Dealer to
register as a secondhand dealer.
However, as stated above, Dealer is a registered secondhand dealer in County B, and pursuant to the
Deposit and Bailment Agreement; exhibit D-1, Customer and Dealer agreed that the gold necklace would
be delivered to Dealer at the address of XXX (County B.) Dealer maintained possession of Customer’s
necklace and stored it at this location in County B. Since the purchase by Dealer does not occur until
Customer defaults on the loan payments to Lender and Lender notifies Dealer of such default, it is
determined that the purchase of the gold necklace takes place in County B at the XXX address and not in
County A at the XXX address. As noted earlier, Dealer is registered as a secondhand dealer in County B.
Based on this determination, Dealer is not required to register with the Department as a secondhand dealer
in County A. Dealer is required to provide local law enforcement officials in County B with a secondhand
dealer transaction form within 24 hours after the date of acquisition of the gold necklace and is also
required to hold the necklace for 15 calendar days after the date of acquisition before it can sell, barter,
exchange, alter, adulterate, use, or in any way dispose of the necklace.
This response constitutes a Technical Assistance Advisement under Section 213.22, F.S., which is binding
on the Department only under the facts and circumstances described in the request for this advice as

specified in Section 213.22, F.S. Our response is predicated on those facts and the specific situation
summarized above. You are advised that subsequent statutory or administrative rule changes, or judicial
interpretations of the statutes or rules, upon which this advice is based, may subject similar future
transactions to a different treatment than expressed in this response.
You are further advised that this response, your request and related documents are public records under
Chapter 119, F.S., which are subject to disclosure to the public under the conditions of Section 213.22,
F.S. Your name, address, and any other details, which might lead to identification of the taxpayer, must
be deleted before disclosure. In an effort to protect the confidentiality of such information, we request you
provide the undersigned with an edited copy of your request for Technical Assistance Advisement, backup
material and response within fifteen days of the date of this advisement.
Sincerely,

Ron Gay
Tax Law Specialist
Technical Assistance & Dispute Resolution
Record ID: 113226