Residual equity – pawnbroker obligations

Skip listen and sharing tools

Residual equity is the amount left over (if any) after you sell unredeemed pawned goods, less the reasonable costs of sale and any amount owing to you under the loan.

A customer has 12 months from the date of sale to claim any residual equity.

The law does not define ‘reasonable costs of sale’. You must ensure that claims for such costs are:

  • linked to the sale of the item
  • reasonable in the circumstances.

Reasonable costs of sale cannot include costs associated with providing the loan. The pawnbroking charges should have covered these costs.

When to notify a customer about residual equity

When residual equity is $10 or more, the pawnbroker must send a Notice of sale of pawned goods (PDF, 14KB) to the person who pawned the goods, within 14 days of the goods being sold.

Please note: by printing and using our notice you will meet the wording and font requirements specified under law. It is important that you comply with these requirements.

When a customer can claim residual equity

Whenever there is residual equity, it is payable, regardless of the amount.

A customer has 12 months from the date of the sale of an unredeemed item to claim any residual equity.

It is an offence for you not to pay the residual equity if it is claimed within 12 months of the sale by the person who pawned the goods. The penalty for this offence is a fine of 20 penalty units. For more information, view our Penalties – Second-hand dealers and pawnbrokers page.

Any residual equity payable is also a debt due to the person who pawned the goods. The customer can sue to recover the money, whether or not the endorsed pawnbroker is prosecuted for failing to pay the residual equity.

Where to next: