March 4, 2014
Home "Gold" Parties
This Compliance Advisory supersedes previous Compliance Advisory dated July 29, 2011.
Who must be licensed?
The Secondhand Precious Metal Object Dealers and Pawnbrokers Act, Business Regulation Article,
Annotated Code of Maryland, Title 12, requires any individual or organization that buys, sells or otherwise trades commercially
with the public items that are composed of gold, silver, platinum, iridium and palladium to be licensed. Bus. Reg. Art., § 12-101(1)(b)(1)(i).
Further, an individual or organization that arranges to sell a secondhand precious metal object for compensation on behalf of someone who is not
licensed is "acting as a dealer," and is, therefore, required to obtain a license. Bus. Reg. Art., § 12-101(b)(1)(ii). An individual who engages
in pawn transactions of other tangible property in addition to secondhand precious metal objects is required to be licensed. Unless a local
jurisdiction regulates pawnbrokers (not with regard to zoning, but rather, issues a local license authorizing the holder to engage
in pawn transactions), a pawnbroker must hold a license issued by the Department of Labor, Licensing and Regulation ("DLLR") before engaging in
such a transaction.
Common examples of individuals who acquire secondhand precious metal objects and who are required to be licensed are: jewelers, antique
dealers, consignment store owners, auctioneers, and an individual, business or organization that that facilitates the sale of secondhand
precious metal objects for compensation. Other examples of individuals or companies that arrange or otherwise facilitate the sale of secondhand
precious metal objects include: E-bay trading posts, internet trading sites or companies; individuals who, in any way, organize,
for compensation, an event designed to facilitate the sale of precious metal items for others; and a person who may act as an agent on
behalf of another individual who desires to sell precious metal objects.
Are "Parties" in a Private Homes, Hotel or Fundraising Events Permitted?
No. Since 2010, the law has prohibited the purchase of secondhand precious metal objects at private homes, hospitals, schools, places of worship,
or at any location other than at the business address of a licensed dealer that appears on a dealer's license. Purchases of secondhand precious
metal objects are permitted at judicial or estate sales, and at the residence of an owner of a precious metal object. It must be emphasized that
the law permits the purchase at a private home of secondhand precious metal objects only exclusively owned by the resident owner. Purchases
from guests or other individuals who do not reside in the home are prohibited. Bus. Reg. Art., § 12-206.
Are Appraisal Parties or Events Permitted?
Under very limited conditions, an event may be hosted at which individuals are invited to have a secondhand precious metal object that he
or she owns appraised by a licensed dealer which may result in the dealer acquiring the object at a later time at the dealer's place of business.
An item cannot be purchased at the location of the appraisal. However, if it is later transported to the dealer's place of business by
the host or an agent of the owner of the object, the transaction may be completed at the dealer's place of business. Caution: The licensed dealer
is required to obtain and record personal information regarding the owner/seller of the secondhand precious metal object at the time of the
appraisal if the owner/seller is not physically present during the transaction through which the dealer acquires the object at the dealer's
business location. Bus. Reg. Art., §§ 12-301 and 12-302.
The host or facilitator of such an event may not receive a commission or compensation of any kind for arranging the "appraisal event"
or subsequent acquisition of appraised objects by a licensed dealer. This includes any payment or compensation of a particular amount or a
percentage of the value or the number of objects referred to the dealer as a result of the appraisal. To accept compensation of any kind
would constitute "acting as a dealer," for arranging a sale without a dealer's license required in compliance with under § 12-206 of the
Business Regulation Article, Annotated Code of Maryland. Such a violation may be prosecuted criminally, punishable by imprisonment
for up to two (2) years, a $10,000 fine, or both, and may also be handled administratively for which a civil monetary penalty of $5,000 for
each violation may be imposed. Bus. Reg. Art., § 12-502.
Implications for the Host
The host of an event at which a licensed dealer may appraise or otherwise offer a value for the subsequent acquisition by the licensed
dealer of a secondhand precious metal object owned by another individual may be in violation of Business Regulation Article,
Annotated Code of Maryland, Title 12 if the individual is offered or receives compensation for arranging for the sale of a precious
metal object on behalf of another person. Such conduct meets the definition of "dealer" under §12-101(b)(1)(ii) for which a licensed must
first be obtained from DLLR.
Implications for the Agent
An agent may be in violation of Business Regulation Article, Annotated Code of Maryland, Title 12, whether the agent is the
host of the "appraisal event" or the agent is another individual designated to act on behalf of the owner/seller of a secondhand precious
metal object after an "appraisal event" if the agent meets the definition of "dealer" as defined in §12-101(b)(1)(ii) for which a licensed
must first be obtained from DLLR.
Implications for the Dealer
The Dealer, by entering into an agreement to compensate a host or an agent for any secondhand precious metal object that the host or agent
has arranged for the dealer to appraise that is ultimately acquired by the dealer, may have violated Business Regulation Article,
Annotated Code of Maryland, §12-207(f) by allowing another person to benefit as a result of the dealer's license. A secondhand precious
metal object dealer's license is not transferable and, accordingly, may be used only for the benefit the licensee.
SUMMARY OF DISCUSSION OF HOME "GOLD" PARTIES
The acquisition of a secondhand precious metal object by a dealer outside of the dealer's approved business location is permissible only
at an estate or judicial sale or at the home of an owner of a secondhand precious metal object and at the request of the owner, as set forth
in Business Regulation Article, Annotated Code of Maryland, § 12-206(b). At no time may a transaction occur at a private residence in
which a licensed dealer or a dealer's employee acquires a secondhand precious metal object owned by a person who is not a resident of the home.
A transaction with any person who does not reside at the location is prohibited. Any other acquisition by a dealer that occurs outside
of a licensed dealer's place of business is prohibited. § 12-206(a).
The appraisal of a secondhand precious metal object that is subsequently sold or otherwise acquired by a licensed dealer may be permitted under
limited circumstances. As stated above, no transaction may occur at a private residence in which a licensed dealer or a dealer's employee
acquires a secondhand precious metal object owned by a person who is not a resident of the home. A transaction with any person who does not
reside at the location is prohibited. A secondhand precious metal object owned by a non-resident at a private residence or other "appraisal
event" may be appraised, but not sold or otherwise given or entrusted to the dealer outside of the business location of the dealer.
Neither a resident of private home nor host of an event, at which a secondhand precious metal object has been appraised, may receive
compensation from the dealer for arranging for the appraisal or subsequent sale to or acquisition by the dealer of a secondhand precious
metal object not owned by that individual. Any compensation paid to a host of an "appraisal event" must be based exclusively on the value
of a secondhand precious metal object that is personally owned by the host. No individual may be designated an agent for a person whose
secondhand precious metal object was appraised by a licensed dealer, for the purpose of transporting the appraised item(s) to the dealer's
place of business for sale or other acquisition by the licensed dealer in return for compensation for doing so.