GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2009
S D
SENATE DRS85009-LG-14 (1/7)
Short Title: Amend Cemetery Act. |
(Public) |
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Sponsors: |
Senator Goss. |
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Referred to: |
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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.