Bill Text: NC S18 | 2010 | Regular Session | Amended
Bill Title: Amend Cemetery Act
Spectrum: Bipartisan Bill
Status: (Passed) 2010-07-20 - Ch. SL 2010-102 [S18 Detail]
Download: North_Carolina-2010-S18-Amended.html
GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
S 1
SENATE BILL 18
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Short Title: Amend Cemetery Act. |
(Public) |
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Sponsors: |
Senators Goss; Jacumin, Snow, Stevens, and Swindell. |
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Referred to: |
Commerce. |
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February 2, 2009
A BILL TO BE ENTITLED
AN ACT to AMEND THE North Carolina CEMETERY ACT BY MODIFYING THE membership of the cemetery commission, Changing the INVESTMENTS options for Perpetual care trust funds, and eliminating THE Ability TO POST bonds IN LIEU OF DEPOSITS TO TRUST ACCOUNTs.
The General Assembly of North Carolina enacts:
SECTION 1. G.S. 65‑50(a) reads as rewritten:
"(a) Membership. – The Cemetery Commission shall consist of nine members. The General Assembly shall appoint two members, one of whom shall be recommended by the President Pro Tempore of the Senate and one of whom shall be recommended by the Speaker of the House of Representatives. The General Assembly's appointments shall have no financial interest in or be involved in the management of a cemetery. The Governor shall appoint seven members as follows:
(1) Two members who own or manage cemeteries in North Carolina.
(2) Three Two members who are selected
from six nominees submitted by the North Carolina Cemetery Association.
(3) Two Three public members who have no
financial interest in, and are not involved in management of, any cemetery or
funeral related business."
SECTION 2. G.S. 65‑60.1 reads as rewritten:
"§ 65‑60.1. Trustees; qualifications; examination of records; enforcement.
(a) The term "corporate trustee" as used in this Article shall mean either a bank or trust company authorized to do business in North Carolina under the supervision of the Commissioner of Banks or any other corporate entity; provided that any corporate entity other than a bank or trust company which acts as trustee under this Article shall first be approved by the Cemetery Commission and shall be subject to supervision by the Cemetery Commission as provided herein.
(b) Any corporate entity, other than a bank or trust company, which desires to act as trustee for cemetery funds under this Article shall make application to the Commission for approval. The Commission shall approve the trustee when it has become satisfied that:
(1) The applicant employs and is directed by persons who are qualified by character, experience, and financial responsibility to care for and invest the funds of others.
(2) The applicant will perform its duties in a proper and legal manner and the trust funds and interest of the public generally will not be jeopardized.
(3) The applicant will act as trustee for cemetery funds which will exceed five hundred thousand dollars ($500,000) in the aggregate.
(4) The applicant is authorized to do business in North Carolina and has adequate facilities to perform its duties as trustee.
(c) Any trustee under this Article, other than a bank or trust company under the supervision of the Commissioner of Banks, shall maintain records relative to cemetery trust funds as the Commission may by regulation prescribe. The records shall be available at the trustee's place of business in North Carolina and shall be available at all reasonable times for examination by a representative of the Commission. The records shall be audited annually, within 90 days from the end of the trust fund's fiscal year, by an independent certified public accountant, and a copy of the audit report shall be promptly forwarded to the Commission.
(d) Whenever it appears that an officer, director, or employee of a trustee, other than a bank or trust company, is dishonest, incompetent, or reckless in the management of a cemetery trust fund, the Commission may bring an action in the courts to remove the trustee and to impound the property and business of the trustee as may be reasonably necessary to protect the trust funds.
(e) Any trustee shall invest and reinvest cemetery
trust funds in the same manner as provided by law for the investment of trust
funds by the clerk of the superior court; provided, however, that cemetery
trust funds held in a fund designated as Trust Fund "A" pursuant to G.S. 65‑64(e)
may be invested and reinvested in accordance with G.S. 36A‑2.G.S. 32‑71.
(f) This section does not apply to a trustee of a perpetual trust fund described in G.S. 65‑64."
SECTION 3. G.S. 65‑64 reads as rewritten:
"§ 65‑64. Deposits to perpetual care fund.
(a) Deposits to the care and maintenance trust fund
must be made by the cemetery company holding title to the subject cemetery
lands on or before the last day of the calendar month following the calendar
month in which final payment is received as provided herein; however the entire
amount required to be deposited into the fund shall be paid within four years
from the date of any contract requiring such the payment
regardless of whether all amounts have been received by the cemetery company.
If the cemetery company fails to make timely deposit, the Commission may levy
and collect a late filing fee of one dollar ($1.00) per day for each day the
deposit is delinquent on each grave space, niche or mausoleum crypt sold. All
deposits shall be made in a bank located within and authorized to do business
in the State. The care and maintenance trust fund shall be invested and
reinvested by the trustee in certificates of deposit and money market funds.
the same manner as provided by law for the investment of other trust funds by
the clerk of the superior court except that such investments may be made
through means of a common trust fund as described in G.S. 36A‑90; provided,
further, that cemetery Investments may be made through means of a common
trust fund as described in G.S. 53‑163.5. Cemetery trust funds
held in a fund designated as Trust Fund "A" pursuant to G.S. 65‑64(e)
may be invested and reinvested in accordance with G.S. 36A‑2.G.S. 32‑71.
The fees and other expenses of the trust fund shall be paid by the trustee from
the net income thereof and may not be paid from the corpus. To the extent that
the said net income is not sufficient to pay such the fees
and other expenses, the same fees and other expenses shall be paid
by the cemetery company.
(b) When a municipal, church‑owned or fraternal
cemetery converts to a private cemetery as defined in G.S. 65‑48,
then said the cemetery shall establish and maintain a care and
maintenance trust fund pursuant to this section; provided, however, the initial
deposit for establishment of this trust fund shall be an amount equal to fifty
dollars ($50.00) per space for all spaces either previously sold or contracted
for sale in said the cemetery at the time of conversion or fifty
thousand dollars ($50,000), whichever sum is greater.
(c) Repealed by 1991 (Regular Session, 1992), c. 1007, s. 35.
(d) In each sales contract, reservation or agreement
wherein burial rights are priced separately, the purchase price of said the
burial rights shall be the only item subject to care and maintenance trust
fund deposits; but if the burial rights are not priced separately therein, the
full amount of the contract, reservations or agreement shall be subject to care
and maintenance trust fund deposits as provided herein, unless the purchase
price of said the burial rights can be determined from the
accounting records of the cemetery company.
(e) When the amount deposited in the perpetual care
fund required by this Article of any cemetery company shall amount to one
hundred fifty thousand dollars ($150,000), anything in this Article to the
contrary notwithstanding, the cemetery company may make all deposits thereafter
either into the original perpetual care trust fund or into a separate fund
established as an irrevocable trust, designated as Perpetual Care Trust Fund "A,"
and invested by the trustee, in accordance with G.S. 36A‑2, as
directed by the cemetery company.G.S. 32‑71. Funds in a
trust fund designated as Trust Fund "A" may not be invested in
another cemetery company.
(f) For special endowments for a specific lot, grave, or a family mausoleum, memorial, marker, or monument, the cemetery may set aside the full amounts received for this individual special care in a separate trust or by a deposit to a savings account in a bank or savings and loan association located within and authorized to do business in the State; provided, however, if the licensee does not set up a separate trust or savings account for the special endowment the full amount thereof shall be deposited in Perpetual Care Trust Fund 'A.'"
SECTION 4. G.S. 65‑66 reads as rewritten:
"§ 65‑66. Receipts from sale of personal property or services; trust account; penalties.
(a) It shall be deemed contrary to public policy if
any person or legal entity receives, holds, controls or manages funds or
proceeds received from the sale of, or from a contract to sell, personal
property or services which may be used in a cemetery in connection with the
burial of or the commemoration of the memory of a deceased human being, where
payments for the same are made either outright or on an installment basis prior
to the demise of the person or persons so purchasing them or for whom they are
so purchased, unless such the person or legal entity holds,
controls or manages said the funds, subject to the limitations
and regulations prescribed in this section. This section shall apply to all
cemetery companies or other legal entities that offer for sale or sell personal
property or services which may be used in a cemetery in connection with the
burial of, or the commemoration of the memory of, a deceased human being, but
shall exclude persons holding a license under Article 13D of Chapter 90 of the
General Statutes.
(b) Any cemetery company or other entity entering into a contract for the sale of personal property or services, to be used in a cemetery in connection with disposing of, or commemorating the memory of a deceased human being wherein the use of the personal property or the furnishing of services is not immediately requested or required, shall comply with the following requirements and conditions:
(1) The cemetery company or other entity shall deposit
an amount equal to sixty percent (60%) of all proceeds received on such the
contracts into a trust account, either in the form of an account governed
by a trust agreement and handled by a corporate trustee or in the form of a
passbook savings account, certificates of deposit for time certificates, and/oror
money‑market certificates or both with a licensed and insured bank
or savings institution located in the State of North Carolina until the amount
deposited equals sixty percent (60%) of the actual sale price of the property
or services sold. Such The accounts and/or or
deposits or both shall be in the name of the cemetery company or other
entity in a form which will permit withdrawals only with the participation and
consent of the Cemetery Commission as required by subdivision (4) of this
subsection.
(2) All funds received on account of a contract for the
sale of such the personal property or services, whether the funds
be received directly from the purchaser or from the sale or assignment of notes
entered into by the purchase or otherwise, shall be deposited into the trust
account as required by subdivision (1) of this section.subsection.
(3) All deposits required herein shall be made into the trust account so established on or before the last day of the month following receipt of the funds by the cemetery company or other entity.
(4) Withdrawals from a trust account may be made by the
depositor, but only with the written approval of the Commission or officer or
employee of the Commission authorized to act for the Commission. Withdrawals
may be made only upon delivery of the merchandise or services for which the
funds were deposited, cancellation of a contract, the presence of excess funds
in the trust account, or under other circumstances deemed appropriate by the
Commission. The Commission shall promulgate rules and regulations governing
withdrawals from trust accounts, including time and frequency of withdrawals, payments
that will be made with the withdrawals, notice to the Commission prior to
withdrawals, the number and identity of persons other than the owner who are
authorized by the owner to make withdrawals, the officers and employees of the
Commission authorized to approve withdrawals, and any other matters necessary
to implement the provisions of this subdivision. Withdrawals will not be
allowed if the amount remaining in the trust account would fall below sixty
percent (60%) of all proceeds received on account of contracts for the sale of such
the personal property or services.
(5) If for any reason a cemetery company or other entity who has entered into a contract for the sale of personal property or services cannot or does not provide the personal property or perform the services called for by the contract after request in writing to do so, the purchaser or his heirs or assigns or duly authorized representative shall be entitled to receive the entire amount paid on the contract and any income if any, earned thereon by the trust account.
(6) Every year after September 1, 1975, the cemetery
company, the trustee or other entity shall within 75 days after the end of the
calendar year, file a financial report of the trust funds with the Commission,
setting forth the principal thereof, the investments and payments made, the
income earned and disbursed; provided, however, that the Commission may require
the cemetery, trustee, or other entity to make such the additional
financial reports as it may deem advisable.
(c) Whenever a contract for the sale of personal
property and/or or services or both allocates payments to
apply to one item at a time under a specific schedule, the contract shall be
considered divisible. Title to each item of personal property or the right to
each item of services shall pass to the purchaser upon full payment for that
item regardless of the remaining balance on other items under the same
contract.
(d) Any contract for the sale of personal property and/or
or services or both shall state separate costs for each item
of personal property, for each act of installation required by the contract,
and for each other item of services included in the contract.
(e) All contracts for the sale of personal property and/or
or services or both must be printed in type size as required by
the Truth in Lending Act, 15 U.S.C. § 1601 et seq., and regulations adopted
pursuant to that act.
(f) In the event of prepayment, interest charged shall be no more than the interest earned on the unpaid balance computed on a percent per month basis for each month or part of a month up to the date of final payment. Any excess interest which has been paid by the purchaser must be refunded to him, his assigns, or his representative within 30 days after the final payment. No penalty or additional charge for prepayment may be required.
(g) In lieu of the deposits required under
subsection (b) of this section, the cemetery company or other entity may post
with the Commission a good and sufficient performance bond by surety company
licensed to do business in North Carolina and in an amount sufficient to cover
all payments made directly or indirectly by or on account of purchasers who
have not received the purchased property and services. Money received from
the sale or assignment of notes entered into by the purchasers, or otherwise,
shall be treated as payments made by the purchasers.
(h) The Commission shall have the power and is
required from time to time as it may deem necessary to examine the business of
any cemetery company or other entity writing contracts for the sale of the
property or services as herein contemplated. The written report of such the
examination shall be filed in the office of the Commission. Any person or
entity being examined shall produce the records of the company needed for such
the examination.
(i) Any provision of any contract for the sale of the personal property or the performance of services herein contemplated under which the purchaser or beneficiary waives any of the provisions of this section shall be void.
(j) Repealed by Session Laws 1991, c. 653, s. 7.
(k) Nothing in this section shall apply to persons or legal entities holding licenses under Article 13D of Chapter 90 of the General Statutes when engaging in activities for which a license is required under that Article.
(l) If any report is not received within the time stipulated by the Commission or herein, the Commission may levy and collect a late filing fee of twenty‑five dollars ($25.00) per month for each month of delinquency.
(m) Within 30 days following the execution of a contract for the sale of personal property or performance of services, a purchaser may cancel his contract by giving written notice to the seller. The seller may cancel the contract, upon default by purchaser, by giving written notice to the purchaser. Within 30 days of notice of cancellation, the cemetery company or other entity shall refund to purchaser the principal amount on deposit in the trust account for his benefit on any undelivered merchandise or services. This amount (no other obligations owed the purchaser by the seller) shall constitute the purchaser's entire entitlements under the contract. The seller may not terminate the contract without complying with this subsection."
SECTION 5. G.S. 65‑70 reads as rewritten:
"§ 65‑70. Construction of mausoleums and belowground crypts; trust fund for receipts from sale of preconstruction crypts; compliance requirements.
(a) A cemetery company shall be required to start
construction of that section of a mausoleum or bank of belowground crypts in
which sales, contracts for sale, reservations for sales or agreements for sales
are being made, within 48 months after the date of the first such sale.
The construction of such the mausoleum section or bank of
belowground crypts shall be completed within five years after the date of the
first sale made; provided, however, extensions for completion, not to exceed
one year, may be granted by the Commission for good reasons shown.
(b) A cemetery company which plans to offer for sale
space in a section of a mausoleum or bank of underground crypts prior to its
construction shall establish a preconstruction trust account. The trust account
shall be administered and operated in the same manner as the merchandise trust
account provided for in G.S. 65‑66 and shall be exclusive of the
merchandise trust account or such the other trust accounts or
funds that may be required by law. The personal representative of any purchaser
of such the space who dies before completion of construction
shall be entitled to a refund of all moneys paid for such the space
including any income earned thereon.
(c) Before a sale, contract for sale, reservation for
sale or agreement for sale in the first mausoleum section or bank of
underground crypts in each cemetery may be made the funds (one hundred twenty
percent (120%) of construction cost) to be deposited to the preconstruction
trust account shall be computed as to said the section or bank of
crypts and such the trust account payments must be made on or
before the last day of the calendar month following receipt by the cemetery
company or its agent of each payment. The trust account portion of each such
payment shall be computed by dividing the cost of the project plus twenty percent
(20%) of said the cost, as computed by a licensed contractor,
engineer or architect by the number of crypts in the section or bank of crypts
to ascertain the cost per unit. The unit cost shall be divided by the contract
sales price of each unit to obtain a percentage which shall be multiplied by
the amount of each payment. The formula shall be computed as follows:
Cost plus twenty percent (20%) divided by number of crypts = cost per unit
Cost per unit divided by contract sales price = percentage
Percentage x payment received = deposit required to preconstruction trust account.
(d) The cemetery company shall be entitled to withdraw
the funds from said the preconstruction trust account only after
the Commission has become satisfied that construction has been completed;
provided, however, that during construction of the mausoleum or bank of
belowground crypts the Commission may, in its discretion, authorize a specific
percentage of the funds to be withdrawn when it appears that at least an
equivalent percentage of construction has been completed.
(e) If a mausoleum section or bank of underground
crypts is not completed within the time limits set out in this section the
corporate trustee, if any, shall contract for and cause said the project
to be completed and paid therefor from the trust account funds deposited to
the project's account paying any balance, less cost and expenses, to the
cemetery company. In the event there is no corporate trustee, the Commission
shall appoint a committee to serve as trustees to contract for and cause said
the project to be completed and paid therefor from the trust account
funds deposited to the project's account paying any balance, less cost and
expenses, to the cemetery company.
(f) In lieu of the payments outlined hereunder
to the preconstruction trust account the cemetery company may deliver to the
Commission a good and sufficient completion or performance bond in an amount
and by surety companies acceptable to the Commission."
SECTION 6. This act becomes effective July 1, 2010, and applies to appointments and investments made on or after that date.
