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Text: HF00485                           Text: HF00487
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House File 486

Partial Bill History

Bill Text

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  1  1    Section 1.  Section 523A.1, unnumbered paragraphs 1 and 4,
  1  2 Code 1995, are amended to read as follows:
  1  3    1.  Whenever an agreement is made by any person, firm, or
  1  4 corporation to furnish, upon the future death of a person
  1  5 named or implied in the agreement, funeral services or funeral
  1  6 merchandise, a minimum of eighty percent of all payments made
  1  7 under the agreement shall be and remain trust funds until
  1  8 occurrence of the death of the person for whose benefit the
  1  9 funds were paid, unless the funds are sooner released to the
  1 10 person making the payment by mutual consent of the parties.
  1 11 Payments otherwise subject to this section are not exempt
  1 12 merely because they are held in certificates of deposit.  The
  1 13 commissioner may adopt rules to prohibit the commingling of
  1 14 trust funds with other funds of the seller.
  1 15    This section does not apply to payments for merchandise de-
  1 16 livered to the purchaser.  Delivery Except for caskets and
  1 17 other types of inner burial containers or concrete burial
  1 18 vaults sold after July 1, 1995, delivery includes storage in a
  1 19 warehouse under the control of the seller or any other
  1 20 warehouse or storage facility approved by the commissioner
  1 21 when a receipt of ownership in the name of the purchaser is
  1 22 delivered to the purchaser, the merchandise is insured against
  1 23 loss, the merchandise is protected against damage, title has
  1 24 been transferred to the purchaser, the merchandise is
  1 25 appropriately identified and described in a manner that it can
  1 26 be distinguished from other similar items of merchandise, the
  1 27 method of storage allows for visual audits of the merchandise,
  1 28 and the annual reporting requirements of section 523A.2,
  1 29 subsection 1, are satisfied.
  1 30    Sec. 2.  Section 523A.1, Code 1995, is amended by adding
  1 31 the following new subsection:
  1 32    NEW SUBSECTION.  2.  An agreement may be funded by
  1 33 insurance proceeds derived from a policy issued by an
  1 34 insurance company authorized to conduct business in this
  1 35 state.  Such funding may be in lieu of a trust fund if the
  2  1 payments are made directly to the insurance company by the
  2  2 purchaser of the agreement.
  2  3    Sec. 3.  Section 523A.2, subsection 1, paragraphs a and c,
  2  4 Code 1995, are amended to read as follows:
  2  5    a.  All funds held in trust under section 523A.1 shall be
  2  6 deposited in a state or federally insured bank, savings and
  2  7 loan association, or credit union authorized to conduct
  2  8 business in this state, or trust department thereof of such
  2  9 bank, savings and loan association, or credit union, or in a
  2 10 trust company authorized to conduct business in this state,
  2 11 within fifteen days after the close of the month of receipt of
  2 12 the funds and shall be held as provided in paragraph "g" for
  2 13 the designated beneficiary until released pursuant to section
  2 14 523A.1.
  2 15    c.  The seller under an agreement referred to in section
  2 16 523A.1 shall file with the commissioner not later than March 1
  2 17 of each year a report including the following information:
  2 18    (1)  The name and address of the seller and the name and
  2 19 address of the establishment that will provide the funeral
  2 20 services or funeral merchandise.
  2 21    (2)  The name of the purchaser, beneficiary, and the amount
  2 22 of each agreement under section 523A.1 made in the preceding
  2 23 year and the date on which it was made.  The balance of each
  2 24 trust account as of the end of the preceding calendar year,
  2 25 identified by the name of the purchaser or the beneficiary,
  2 26 and a report of any amounts withdrawn from trust and the
  2 27 reason for each withdrawal.
  2 28    (3)  The total value of agreements subject to section
  2 29 523A.1 entered into, the total amount paid pursuant to those
  2 30 agreements, and the total amount deposited in trust as
  2 31 required under section 523A.1, during the preceding year.  A
  2 32 description of insurance funding outstanding at the end of the
  2 33 preceding calendar year, identified by the name of the
  2 34 purchaser or the beneficiary, and a report of any insurance
  2 35 payments received by the seller.
  3  1    (4)  The amount of any payments received pursuant to
  3  2 agreements reported in previous years in accordance with
  3  3 subparagraphs (2) and (3) and the amount of those payments
  3  4 deposited in trust for each purchaser.
  3  5    (5)  The change in status of any trust account, including
  3  6 total amount of interest or income withdrawn from each trust
  3  7 account in the preceding year, and for each purchaser, any
  3  8 other amounts withdrawn from trust and the reason for each
  3  9 withdrawal.  However, regular increments of interest or income
  3 10 need not be reported on a yearly basis.
  3 11    (6)  The name and address of the financial institution in
  3 12 which trust funds were deposited, and the name and address of
  3 13 each insurance company which funds agreements under section
  3 14 523A.1.
  3 15    (7)  The name and address of each purchaser of funeral
  3 16 merchandise delivered in lieu of trusting pursuant to section
  3 17 523A.1, and a description of that merchandise for each
  3 18 purchaser.
  3 19    (8) (4)  The A complete inventory of funeral merchandise
  3 20 and its location in the seller's possession that has been
  3 21 delivered in lieu of trusting pursuant to section 523A.1.
  3 22    (9)  Other information reasonably required by the com-
  3 23 missioner for purposes of administration of this chapter.
  3 24    The information required by subparagraphs (7) and (8) shall
  3 25 include, including the location of the merchandise, serial
  3 26 numbers or warehouse receipt numbers, identified by the name
  3 27 of the purchaser or the beneficiary, and a verified statement
  3 28 of a certified public accountant that the certified public
  3 29 accountant has conducted a physical inventory of the funeral
  3 30 merchandise specified in subparagraph (8) and that each item
  3 31 of that merchandise is in the seller's possession at the
  3 32 specified location.  The statement shall be on a form
  3 33 prescribed by the commissioner.
  3 34    (5)  The name of the purchaser, beneficiary, and the amount
  3 35 of each agreement referred to in section 523A.1 made in the
  4  1 preceding year and the date on which it was made.
  4  2    (6)  Other information reasonably required by the
  4  3 commissioner for purposes of administration of this chapter.
  4  4    The report shall be accompanied by a filing fee determined
  4  5 by the commissioner which shall be sufficient to defray the
  4  6 costs of administering this chapter.
  4  7    Sec. 4.  Section 523A.2, subsection 7, Code 1995, is
  4  8 amended to read as follows:
  4  9    7.  This chapter does not prohibit the funding of an
  4 10 agreement otherwise subject to section 523A.1 by insurance
  4 11 proceeds derived from a policy issued by an insurance company
  4 12 authorized to conduct business in this state.  The seller of
  4 13 an agreement subject to this chapter which is to be funded by
  4 14 insurance proceeds shall obtain all permits required to be
  4 15 obtained under this chapter and comply with the reporting
  4 16 requirements of this section.
  4 17    Sec. 5.  Section 523A.8, subsection 1, paragraphs e, h, and
  4 18 j, Code 1995, are amended to read as follows:
  4 19    e.  State clearly whether the agreement is a guaranteed
  4 20 price contract or a nonguaranteed price contract.  Each
  4 21 nonguaranteed price contract shall contain in twelve point
  4 22 bold type, an explanation of the consequences in substantially
  4 23 the following language:
  4 24    THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS AGREEMENT
  4 25 ARE SUBJECT TO CHANGE IN THE FUTURE.  ANY FUNDS PAID UNDER
  4 26 THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED, TOGETHER WITH
  4 27 ACCRUED INCOME, TOWARD THE FINAL COSTS OF THE MERCHANDISE OR
  4 28 SERVICES CONTRACTED FOR.  ADDITIONAL CHARGES MAY BE REQUIRED.
  4 29    h.  Explain the disposition of the interest and disclose
  4 30 what fees and expenses may be charged if incurred income
  4 31 generated from investments, include a statement of fees,
  4 32 expenses, and taxes which may be deducted, and include a
  4 33 statement of the buyer's responsibility for income taxes owed
  4 34 on the income, if applicable.
  4 35    j.  State the name and address of the commissioner.
  5  1 Include an explanation of regulatory oversight by the
  5  2 insurance division in twelve point bold type, in substantially
  5  3 the following language:
  5  4    THIS CONTRACT MUST BE REPORTED TO THE IOWA INSURANCE
  5  5 DIVISION BY THE FIRST DAY OF MARCH OF THE FOLLOWING YEAR.  YOU
  5  6 MAY CALL THE INSURANCE DIVISION AT (INSERT TELEPHONE NUMBER)
  5  7 TO CONFIRM THAT YOUR CONTRACT HAS BEEN REPORTED.  WRITTEN
  5  8 INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE FOLLOWING
  5  9 ADDRESS:  IOWA SECURITIES BUREAU, (INSERT ADDRESS).
  5 10    Sec. 6.  Section 523A.8, Code 1995, is amended by adding
  5 11 the following new subsection:
  5 12    NEW SUBSECTION.  1A.  The commissioner may adopt rules
  5 13 establishing disclosure and format requirements to promote
  5 14 consumers' understanding of the merchandise and services
  5 15 purchased and the available funding mechanisms under an
  5 16 agreement pursuant to this chapter.
  5 17    Sec. 7.  Section 523A.8, Code 1995, is amended by adding
  5 18 the following new subsection:
  5 19    NEW SUBSECTION.  3.  The seller shall disclose at the time
  5 20 an application is made by an individual and prior to accepting
  5 21 the applicant's initial premium or deposit for a preneed
  5 22 funeral contract or prearrangement subject to section 523A.1
  5 23 which is funded by a life insurance policy, the following
  5 24 information:
  5 25    a.  That a life insurance policy is involved or being used
  5 26 to fund an agreement.
  5 27    b.  The nature of the relationship among the soliciting
  5 28 agent or agents, the provider of the funeral or cemetery
  5 29 merchandise or services, the administrator, and any other
  5 30 person.
  5 31    c.  The relationship of the life insurance policy to the
  5 32 funding of the prearrangement and the nature and existence of
  5 33 any guarantees relating to the prearrangement.
  5 34    d.  The impact on the prearrangement of the following:
  5 35    (1)  Changes in the life insurance policy including, but
  6  1 not limited to, changes in the assignment, beneficiary
  6  2 designation, or use of proceeds.
  6  3    (2)  Any penalties to be incurred by the policyholder as a
  6  4 result of the failure to make premium payments.
  6  5    (3)  Penalties to be incurred or cash to be received as a
  6  6 result of the cancellation or surrender of the life insurance
  6  7 policy.
  6  8    e.  A list of merchandise and services which are applied or
  6  9 contracted for in the prearrangement and all relevant
  6 10 information concerning the price of the funeral services,
  6 11 including an indication that the purchase price is either
  6 12 guaranteed at the time of purchase or to be determined at the
  6 13 time of need.
  6 14    f.  All relevant information concerning what occurs and
  6 15 whether any entitlements or obligations arise if there is a
  6 16 difference between the proceeds of the life insurance policy
  6 17 and the amount actually needed to fund the agreement.
  6 18    g.  Any penalties or restrictions, including but not
  6 19 limited to, geographic restrictions or the inability of the
  6 20 provider to perform, on the delivery of merchandise, services,
  6 21 or the prearrangement guarantee.
  6 22    h.  That a sales commission or other form of compensation
  6 23 is being paid and, if so, the identity of the individuals or
  6 24 entities to whom it is paid.
  6 25    Sec. 8.  Section 523A.20, Code 1995, is amended to read as
  6 26 follows:
  6 27    523A.20  INSURANCE DIVISION'S REGULATORY FUND.
  6 28    The insurance division may authorize the creation of a
  6 29 special revenue fund in the state treasury, to be known as the
  6 30 insurance division regulatory fund.  Commencing July 1, 1990,
  6 31 and annually thereafter, the The commissioner shall allocate
  6 32 annually from the fees paid pursuant to section 523A.2, one
  6 33 dollar two dollars for each agreement reported on an
  6 34 establishment permit holder's annual report for deposit to the
  6 35 regulatory fund.  The remainder of the fees collected pursuant
  7  1 to section 523A.2 shall be deposited into the general fund of
  7  2 the state.  However, if the balance of the regulatory fund on
  7  3 that July 1 exceeds two hundred thousand dollars, the
  7  4 allocation to the regulatory fund shall not be made and the
  7  5 total sum of the fees paid pursuant to section 523A.2 shall be
  7  6 deposited in the general fund of the state.  In addition, on
  7  7 May 1 of 1994 1996 and 1995 1997, the commissioner, to the
  7  8 extent necessary to fund consumer education, audits,
  7  9 investigations, payments under contract with licensed
  7 10 establishments to provide funeral merchandise or services in
  7 11 the event of statutory noncompliance by the initial seller,
  7 12 liquidations, and receiverships, shall assess establishment
  7 13 permit holders five two dollars for each agreement reported on
  7 14 the establishment permit holder's annual report of sales
  7 15 executed during the preceding year, which shall be deposited
  7 16 in the insurance division regulatory fund.  The moneys in the
  7 17 regulatory fund shall be retained in the fund.  The moneys are
  7 18 appropriated and, subject to authorization by the
  7 19 commissioner, may be used to pay auditors, audit expenses,
  7 20 investigative expenses, and the expenses of receiverships
  7 21 established pursuant to section 523A.19.  An annual assessment
  7 22 shall not be imposed if the current balance of the fund
  7 23 exceeds two hundred thousand dollars.
  7 24    Sec. 9.  NEW SECTION.  523A.21  LICENSE REVOCATION &endash;
  7 25 RECOMMENDATION BY COMMISSIONER TO BOARD OF MORTUARY SCIENCE
  7 26 EXAMINERS.
  7 27    Upon a determination by the commissioner that grounds exist
  7 28 for an administrative license revocation or suspension action
  7 29 by the board of mortuary science examiners under chapter 156,
  7 30 the commissioner may forward to the board the grounds for the
  7 31 determination, including all evidence in the possession of the
  7 32 commissioner, so that the board may proceed with the matter as
  7 33 deemed appropriate.
  7 34    Sec. 10.  NEW SECTION.  523A.22  LIQUIDATION.
  7 35    1.  GROUNDS FOR LIQUIDATION.  Upon receipt of a written
  8  1 request from the board of mortuary science examiners, the
  8  2 commissioner may petition the district court for an order
  8  3 directing the commissioner to liquidate a funeral
  8  4 establishment on any of the following grounds:
  8  5    a.  The funeral establishment did not deposit funds
  8  6 pursuant to section 523A.1 or withdrew funds in a manner
  8  7 inconsistent with this chapter and is insolvent.
  8  8    b.  The funeral establishment did not deposit funds
  8  9 pursuant to section 523A.1 or withdrew funds in a manner
  8 10 inconsistent with this chapter and the condition of the
  8 11 funeral establishment is such that the further transaction of
  8 12 business would be hazardous, financially or otherwise, to its
  8 13 preneed funeral customers or the public.
  8 14    2.  LIQUIDATION ORDER.
  8 15    a.  An order to liquidate the business of a funeral
  8 16 establishment shall appoint the commissioner as liquidator and
  8 17 shall direct the liquidator to immediately take possession of
  8 18 the assets of the funeral establishment and to administer them
  8 19 under the general supervision of the court.  The liquidator is
  8 20 vested with the title to the property, contracts, and rights
  8 21 of action and the books and records of the funeral
  8 22 establishment ordered liquidated, wherever located, as of the
  8 23 entry of the final order of liquidation.  The filing or
  8 24 recording of the order with the clerk of court and the
  8 25 recorder of deeds of the county in which its principal office
  8 26 or place of business is located, or, in the case of real
  8 27 estate with the recorder of deeds of the county where the
  8 28 property is located, is notice as a deed, bill of sale, or
  8 29 other evidence of title duly filed or recorded with the
  8 30 recorder of deeds.
  8 31    b.  Upon issuance of an order, the rights and liabilities
  8 32 of a funeral establishment and of the funeral establishment's
  8 33 creditors, preneed and at-need funeral customers, owners, and
  8 34 other persons interested in the funeral establishment's estate
  8 35 shall become fixed as of the date of the entry of the order of
  9  1 liquidation, except as provided in subsection 14.
  9  2    c.  At the time of petitioning for an order of liquidation,
  9  3 or at any time after the time of petitioning, the
  9  4 commissioner, after making appropriate findings of a funeral
  9  5 establishment's insolvency, may petition the court for a
  9  6 declaration of insolvency.  After providing notice and hearing
  9  7 as it deems proper, the court may make the declaration.
  9  8    d.  An order issued under this section shall require
  9  9 accounting to the court by the liquidator.  Accountings, at a
  9 10 minimum, must include all funds received or disbursed by the
  9 11 liquidator during the current period.  An accounting shall be
  9 12 filed within one year of the liquidation order and at such
  9 13 other times as the court may require.
  9 14    e.  Within five days after the initiation of an appeal of
  9 15 an order of liquidation, which order has not been stayed, the
  9 16 commissioner shall present for the court's approval a plan for
  9 17 the continued performance of the funeral establishment's
  9 18 obligations during the pendency of an appeal.  The plan shall
  9 19 provide for the continued performance of preneed and at-need
  9 20 funeral contracts in the normal course of events,
  9 21 notwithstanding the grounds alleged in support of the order of
  9 22 liquidation including the ground of insolvency.  If the
  9 23 defendant funeral establishment's financial condition, in the
  9 24 judgment of the commissioner, will not support the full
  9 25 performance of all obligations during the appeal pendency
  9 26 period, the plan may prefer the claims of certain at-need and
  9 27 preneed funeral customers and claimants over creditors and
  9 28 interested parties as well as other at-need and preneed
  9 29 funeral customers and claimants, as the commissioner finds to
  9 30 be fair and equitable considering the relative circumstances
  9 31 of such at-need and preneed funeral customers and claimants.
  9 32 The court shall examine the plan submitted by the commissioner
  9 33 and if it finds the plan to be in the best interests of the
  9 34 parties, the court shall approve the plan.  An action shall
  9 35 not lie against the commissioner or any of the commissioner's
 10  1 deputies, agents, clerks, assistants, or attorneys by any
 10  2 party based on preference in an appeal pendency plan approved
 10  3 by the court.
 10  4    3.  POWERS OF LIQUIDATOR.
 10  5    a.  The liquidator may do any of the following:
 10  6    (1)  Appoint a special deputy to act for the liquidator
 10  7 under this chapter, and determine the special deputy's
 10  8 reasonable compensation.  The special deputy shall have all
 10  9 the powers of the liquidator granted by this section.  The
 10 10 special deputy shall serve at the pleasure of the liquidator.
 10 11    (2)  Hire employees and agents, legal counsel, accountants,
 10 12 appraisers, consultants, and other personnel as the
 10 13 commissioner may deem necessary to assist in the liquidation.
 10 14    (3)  With the approval of the court fix reasonable
 10 15 compensation of employees and agents, legal counsel,
 10 16 accountants, appraisers, and consultants.
 10 17    (4)  Pay reasonable compensation to persons appointed and
 10 18 defray from the funds or assets of the funeral establishment
 10 19 all expenses of taking possession of, conserving, conducting,
 10 20 liquidating, disposing of, or otherwise dealing with the
 10 21 business and property of the funeral establishment.  If the
 10 22 property of the funeral establishment does not contain
 10 23 sufficient cash or liquid assets to defray the costs incurred,
 10 24 the commissioner may advance the costs so incurred out of the
 10 25 insurance division regulatory fund.  Amounts so advanced for
 10 26 expenses of administration shall be repaid to the insurance
 10 27 division regulatory fund for the use of the division out of
 10 28 the first available moneys of the funeral establishment.
 10 29    (5)  Hold hearings, subpoena witnesses, and compel their
 10 30 attendance, administer oaths, examine a person under oath, and
 10 31 compel a person to subscribe to the person's testimony after
 10 32 it has been correctly reduced to writing, and in connection to
 10 33 the proceedings require the production of books, papers,
 10 34 records, or other documents which the liquidator deems
 10 35 relevant to the inquiry.
 11  1    (6)  Collect debts and moneys due and claims belonging to
 11  2 the funeral establishment, wherever located.  Pursuant to this
 11  3 subparagraph, the liquidator may do any of the following:
 11  4    (a)  Institute timely action in other jurisdictions to
 11  5 forestall garnishment and attachment proceedings against
 11  6 debts.
 11  7    (b)  Perform acts as are necessary or expedient to collect,
 11  8 conserve, or protect its assets or property, including the
 11  9 power to sell, compound, compromise, or assign debts for
 11 10 purposes of collection upon terms and conditions as the
 11 11 liquidator deems best.
 11 12    (c)  Pursue any creditor's remedies available to enforce
 11 13 claims.
 11 14    (7)  Conduct public and private sales of the property of
 11 15 the funeral establishment.
 11 16    (8)  Use assets of the funeral establishment under a
 11 17 liquidation order to transfer obligations of preneed funeral
 11 18 contracts to a solvent funeral establishment, if the transfer
 11 19 can be accomplished without prejudice to applicable priorities
 11 20 under subsection 18.
 11 21    (9)  Acquire, hypothecate, encumber, lease, improve, sell,
 11 22 transfer, abandon, or otherwise dispose of or deal with
 11 23 property of the funeral establishment at its market value or
 11 24 upon terms and conditions as are fair and reasonable.  The
 11 25 liquidator shall also have power to execute, acknowledge, and
 11 26 deliver deeds, assignments, releases, and other instruments
 11 27 necessary to effectuate a sale of property or other
 11 28 transaction in connection with the liquidation.
 11 29    (10)  Borrow money on the security of the funeral
 11 30 establishment's assets or without security and execute and
 11 31 deliver documents necessary to that transaction for the
 11 32 purpose of facilitating the liquidation.  Money borrowed
 11 33 pursuant to this subparagraph shall be repaid as an
 11 34 administrative expense and shall have priority over any other
 11 35 class 1 claims under the priority of distribution established
 12  1 in subsection 18.
 12  2    (11)  Enter into contracts as necessary to carry out the
 12  3 order to liquidate and affirm or disavow contracts to which
 12  4 the funeral establishment is a party.
 12  5    (12)  Continue to prosecute and to institute in the name of
 12  6 the funeral establishment or in the liquidator's own name any
 12  7 and all suits and other legal proceedings, in this state or
 12  8 elsewhere, and to abandon the prosecution of claims the
 12  9 liquidator deems unprofitable to pursue further.
 12 10    (13)  Prosecute an action on behalf of the creditors, at-
 12 11 need funeral customers, preneed funeral customers, or owners
 12 12 against an officer of the funeral establishment or any other
 12 13 person.
 12 14    (14)  Remove records and property of the funeral
 12 15 establishment to the offices of the commissioner or to other
 12 16 places as may be convenient for the purposes of efficient and
 12 17 orderly execution of the liquidation.
 12 18    (15)  Deposit in one or more banks in this state sums as
 12 19 are required for meeting current administration expenses and
 12 20 distributions.
 12 21    (16)  Unless the court orders otherwise, invest funds not
 12 22 currently needed.
 12 23    (17)  File necessary documents for recording in the office
 12 24 of a recorder of deeds or record office in this state or
 12 25 elsewhere where property of the funeral establishment is
 12 26 located.
 12 27    (18)  Assert defenses available to the funeral
 12 28 establishment as against third persons including statutes of
 12 29 limitations, statutes of fraud, and the defense of usury.  A
 12 30 waiver of a defense by the funeral establishment after a
 12 31 petition in liquidation has been filed shall not bind the
 12 32 liquidator.
 12 33    (19)  Exercise and enforce the rights, remedies, and powers
 12 34 of a creditor, at-need funeral customer, preneed funeral
 12 35 customer, or owner, including the power to avoid transfer or
 13  1 lien that may be given by the general law and that is not
 13  2 included within subsections 7 through 9.
 13  3    (20)  Intervene in a proceeding wherever instituted that
 13  4 might lead to the appointment of a receiver or trustee, and
 13  5 act as the receiver or trustee whenever the appointment is
 13  6 offered.
 13  7    (21)  Exercise powers now held or later conferred upon
 13  8 receivers by the laws of this state which are not inconsistent
 13  9 with this chapter.
 13 10    b.  This subsection does not limit the liquidator or
 13 11 exclude the liquidator from exercising a power not listed in
 13 12 paragraph "a" that may be necessary or appropriate to
 13 13 accomplish the purposes of this chapter.
 13 14    4.  NOTICE TO CREDITORS AND OTHERS.
 13 15    a.  Unless the court otherwise directs, the liquidator
 13 16 shall give notice of the liquidation order as soon as possible
 13 17 by doing all of the following:
 13 18    (1)  By first class mail to all persons known or reasonably
 13 19 expected to have claims against the funeral establishment,
 13 20 including at-need and preneed funeral customers, by mailing a
 13 21 notice to their last known address as indicated by the records
 13 22 of the funeral establishment.
 13 23    (2)  By publication in a newspaper of general circulation
 13 24 in the county in which the funeral establishment has its
 13 25 principal place of business and in other locations as the
 13 26 liquidator deems appropriate.
 13 27    b.  Notice to potential claimants under paragraph "a" shall
 13 28 require claimants to file with the liquidator their claims
 13 29 together with proper proofs of the claim under subsection 13
 13 30 on or before a date the liquidator shall specify in the
 13 31 notice.  Claimants shall keep the liquidator informed of their
 13 32 changes of address, if any.
 13 33    c.  If notice is given pursuant to this section, the
 13 34 distribution of assets of the funeral establishment under this
 13 35 chapter shall be conclusive with respect to claimants, whether
 14  1 or not a claimant actually received notice.
 14  2    5.  ACTIONS BY AND AGAINST LIQUIDATOR.
 14  3    a.  After the issuance of an order appointing a liquidator
 14  4 of a funeral establishment, an action at law or equity shall
 14  5 not be brought against the funeral establishment in this state
 14  6 or elsewhere, and existing actions shall not be maintained or
 14  7 further presented after issuance of the order.  Whenever in
 14  8 the liquidator's judgment, protection of the estate of the
 14  9 funeral establishment necessitates intervention in an action
 14 10 against the funeral establishment that is pending outside this
 14 11 state, the liquidator may intervene in the action.  The
 14 12 liquidator may defend, at the expense of the estate of the
 14 13 funeral establishment, an action in which the liquidator
 14 14 intervenes under this section.
 14 15    b.  Within two years or such additional time as applicable
 14 16 law may permit, the liquidator, after the issuance of an order
 14 17 for liquidation, may institute an action or proceeding on
 14 18 behalf of the estate of the funeral establishment upon any
 14 19 cause of action against which the period of limitation fixed
 14 20 by applicable law has not expired at the time of the filing of
 14 21 the petition upon which the order is entered.  If a period of
 14 22 limitation is fixed by agreement for instituting a suit or
 14 23 proceeding upon a claim, or for filing a claim, proof of
 14 24 claim, proof of loss, demand, notice, or the like, or if in a
 14 25 proceeding, judicial or otherwise, a period of limitation is
 14 26 fixed in the proceeding or pursuant to applicable law for
 14 27 taking an action, filing a claim or pleading, or doing an act,
 14 28 and if the period had not expired at the date of the filing of
 14 29 the petition, the liquidator may, for the benefit of the
 14 30 estate, take any action or do any act, required of or
 14 31 permitted to the funeral establishment, within a period of one
 14 32 hundred eighty days subsequent to the entry of an order for
 14 33 liquidation, or within a further period as is shown to the
 14 34 satisfaction of the court not to be unfairly prejudicial to
 14 35 the other party.
 15  1    c.  A statute of limitation or defense of laches shall not
 15  2 run with respect to an action against a funeral establishment
 15  3 between the filing of a petition for liquidation against the
 15  4 funeral establishment and the denial of the petition.  An
 15  5 action against the funeral establishment that might have been
 15  6 commenced when the petition was filed may be commenced for at
 15  7 least sixty days after the petition is denied.
 15  8    6.  COLLECTION AND LIST OF ASSETS.
 15  9    a.  As soon as practicable after the liquidation order but
 15 10 not later than one hundred twenty days after such order, the
 15 11 liquidator shall prepare in duplicate a list of the funeral
 15 12 establishment's assets.  The list shall be amended or
 15 13 supplemented as the liquidator may determine.  One copy shall
 15 14 be filed in the office of the clerk of court and one copy
 15 15 shall be retained for the liquidator's files.  Amendments and
 15 16 supplements shall be similarly filed.
 15 17    b.  The liquidator shall reduce the assets to a degree of
 15 18 liquidity that is consistent with the effective execution of
 15 19 the liquidation.
 15 20    c.  A submission to the court for distribution of assets in
 15 21 accordance with subsection 11 fulfills the requirements of
 15 22 paragraph "a".
 15 23    7.  FRAUDULENT TRANSFERS PRIOR TO PETITION.
 15 24    a.  A transfer made and an obligation incurred by a funeral
 15 25 establishment within one year prior to the filing of a
 15 26 successful petition for liquidation under this chapter is
 15 27 fraudulent as to then existing and future creditors if made or
 15 28 incurred without fair consideration, or with actual intent to
 15 29 hinder, delay, or defraud either existing or future creditors.
 15 30 A fraudulent transfer made or an obligation incurred by a
 15 31 funeral establishment ordered to be liquidated under this
 15 32 chapter may be avoided by the receiver, except as to a person
 15 33 who in good faith is a purchaser, lienor, or obligee for a
 15 34 present fair equivalent value.  A purchaser, lienor, or
 15 35 obligee, who in good faith has given a consideration less than
 16  1 fair for such transfer, lien, or obligation, may retain the
 16  2 property, lien, or obligation as security for repayment.  The
 16  3 court may, on due notice, order any such transfer or
 16  4 obligation to be preserved for the benefit of the estate, and
 16  5 in that event, the receiver shall succeed to and may enforce
 16  6 the rights of the purchaser, lienor, or obligee.
 16  7    b.  (1)  A transfer of property other than real property is
 16  8 made when it becomes perfected so that a subsequent lien
 16  9 obtainable by legal or equitable proceedings on a simple
 16 10 contract could not become superior to the rights of the
 16 11 transferee under subsection 9, paragraph "c".
 16 12    (2)  A transfer of real property is made when it becomes
 16 13 perfected so that a subsequent bona fide purchaser from the
 16 14 funeral establishment could not obtain rights superior to the
 16 15 rights of the transferee.
 16 16    (3)  A transfer which creates an equitable lien is not
 16 17 perfected if there are available means by which a legal lien
 16 18 could be created.
 16 19    (4)  A transfer not perfected prior to the filing of a
 16 20 petition for liquidation is deemed to be made immediately
 16 21 before the filing of the successful petition.
 16 22    (5)  This subsection applies whether or not there are or
 16 23 were creditors who might have obtained a lien or persons who
 16 24 might have become bona fide purchasers.
 16 25    8.  FRAUDULENT TRANSFER AFTER PETITION.
 16 26    a.  After a petition for liquidation has been filed a
 16 27 transfer of real property of the funeral establishment made to
 16 28 a person acting in good faith is valid against the liquidator
 16 29 if made for a present fair equivalent value.  If the transfer
 16 30 was not made for a present fair equivalent value, then the
 16 31 transfer is valid to the extent of the present consideration
 16 32 actually paid for which amount the transferee shall have a
 16 33 lien on the property transferred.  The commencement of a
 16 34 proceeding in liquidation is constructive notice upon the
 16 35 recording of a copy of the petition for or order of
 17  1 liquidation with the recorder of deeds in the county where any
 17  2 real property in question is located.  The exercise by a court
 17  3 of the United States or a state or jurisdiction to authorize a
 17  4 judicial sale of real property of the funeral establishment
 17  5 within a county in a state shall not be impaired by the
 17  6 pendency of a proceeding unless the copy is recorded in the
 17  7 county prior to the consummation of the judicial sale.
 17  8    b.  After a petition for liquidation has been filed and
 17  9 before either the receiver takes possession of the property of
 17 10 the funeral establishment or an order of liquidation is
 17 11 granted:
 17 12    (1)  A transfer of the property, other than real property,
 17 13 of the funeral establishment made to a person acting in good
 17 14 faith is valid against the receiver if made for a present fair
 17 15 equivalent value.  If the transfer was not made for a present
 17 16 fair equivalent value, then the transfer is valid to the
 17 17 extent of the present consideration actually paid for which
 17 18 amount the transferee shall have a lien on the property
 17 19 transferred.
 17 20    (2)  If acting in good faith, a person indebted to the
 17 21 funeral establishment or holding property of the funeral
 17 22 establishment may pay the debt or deliver the property, or any
 17 23 part of the property, to the funeral establishment or upon the
 17 24 funeral establishment's order as if the petition were not
 17 25 pending.
 17 26    (3)  A person having actual knowledge of the pending
 17 27 liquidation is not acting in good faith.
 17 28    (4)  A person asserting the validity of a transfer under
 17 29 this subsection has the burden of proof.  Except as provided
 17 30 in this subsection, a transfer by or on behalf of the funeral
 17 31 establishment after the date of the petition for liquidation
 17 32 by any person other than the liquidator is not valid against
 17 33 the liquidator.
 17 34    c.  A person receiving any property from the funeral
 17 35 establishment or any benefit of the property of the funeral
 18  1 establishment which is a fraudulent transfer under paragraph
 18  2 "a" is personally liable for the property or benefit and shall
 18  3 account to the liquidator.
 18  4    d.  This chapter does not impair the negotiability of
 18  5 currency or negotiable instruments.
 18  6    9.  VOIDABLE PREFERENCES AND LIENS.
 18  7    a.  (1)  A preference is a transfer of the property of a
 18  8 funeral establishment to or for the benefit of a creditor for
 18  9 an antecedent debt made or suffered by the funeral
 18 10 establishment within one year before the filing of a
 18 11 successful petition for liquidation under this chapter, the
 18 12 effect of which transfer may be to enable the creditor to
 18 13 obtain a greater percentage of this debt than another creditor
 18 14 of the same class would receive.  If a liquidation order is
 18 15 entered while the funeral establishment is already subject to
 18 16 a receivership, then the transfers are preferences if made or
 18 17 suffered within one year before the filing of the successful
 18 18 petition for the receivership, or within two years before the
 18 19 filing of the successful petition for liquidation, whichever
 18 20 time is shorter.
 18 21    (2)  A preference may be avoided by the liquidator if any
 18 22 of the following exist:
 18 23    (a)  The funeral establishment was insolvent at the time of
 18 24 the transfer.
 18 25    (b)  The transfer was made within four months before the
 18 26 filing of the petition.
 18 27    (c)  At the time the transfer was made, the creditor
 18 28 receiving it or to be benefited by the transfer or the
 18 29 creditor's agent acting with reference to the transfer had
 18 30 reasonable cause to believe that the funeral establishment was
 18 31 insolvent or was about to become insolvent.
 18 32    (d)  The creditor receiving the transfer was an officer, or
 18 33 an employee, attorney, or other person who was in fact in a
 18 34 position of comparable influence in the funeral establishment
 18 35 to an officer whether or not the person held the position of
 19  1 an officer, owner, or other person, firm, corporation,
 19  2 association, or aggregation of persons with whom the funeral
 19  3 establishment did not deal at arm's length.
 19  4    (3)  Where the preference is voidable, the liquidator may
 19  5 recover the property.  If the property has been converted, the
 19  6 liquidator may recover its value from a person who has
 19  7 received or converted the property.  However, if a bona fide
 19  8 purchaser or lienor has given less than fair equivalent value,
 19  9 the purchaser or lienor shall have a lien upon the property to
 19 10 the extent of the consideration actually given.  Where a
 19 11 preference by way of lien or security interest is voidable,
 19 12 the court may on due notice order the lien or security
 19 13 interest to be preserved for the benefit of the estate, in
 19 14 which event the lien or title shall pass to the liquidator.
 19 15    b.  (1)  A transfer of property other than real property is
 19 16 made when it becomes perfected so that a subsequent lien
 19 17 obtainable by legal or equitable proceedings on a simple
 19 18 contract could not become superior to the rights of the
 19 19 transferee.
 19 20    (2)  A transfer of real property is made when it becomes
 19 21 perfected so that a subsequent bona fide purchaser from the
 19 22 funeral establishment could not obtain rights superior to the
 19 23 rights of the transferee.
 19 24    (3)  A transfer which creates an equitable lien is not
 19 25 perfected if there are available means by which a legal lien
 19 26 could be created.
 19 27    (4)  A transfer not perfected prior to the filing of a
 19 28 petition for liquidation is deemed to be made immediately
 19 29 before the filing of the successful petition.
 19 30    (5)  This subsection applies whether or not there are or
 19 31 were creditors who might have obtained liens or persons who
 19 32 might have become bona fide purchasers.
 19 33    c.  (1)  A lien obtainable by legal or equitable
 19 34 proceedings upon a simple contract is one arising in the
 19 35 ordinary course of the proceedings upon the entry or docketing
 20  1 of a judgment or decree, or upon attachment, garnishment,
 20  2 execution, or like process, whether before, upon, or after
 20  3 judgment or decree and whether before or upon levy.  It does
 20  4 not include liens which under applicable law are given a
 20  5 special priority over other liens which are prior in time.
 20  6    (2)  A lien obtainable by legal or equitable proceedings
 20  7 could become superior to the rights of a transferee, or a
 20  8 purchaser could obtain rights superior to the rights of a
 20  9 transferee within the meaning of paragraph "b", if such
 20 10 consequences would follow only from the lien or purchase
 20 11 itself, or from the lien or purchase followed by a step wholly
 20 12 within the control of the respective lienholder or purchaser,
 20 13 with or without the aid of ministerial action by public
 20 14 officials.  However, a lien could not become superior and a
 20 15 purchase could not create superior rights for the purpose of
 20 16 paragraph "b" through an act subsequent to the obtaining of a
 20 17 lien or subsequent to a purchase which requires the agreement
 20 18 or concurrence of any third party or which requires further
 20 19 judicial action or ruling.
 20 20    d.  A transfer of property for or on account of a new and
 20 21 contemporaneous consideration, which is under paragraph "b"
 20 22 made or suffered after the transfer because of delay in
 20 23 perfecting it, does not become a transfer for or on account of
 20 24 an antecedent debt if any acts required by the applicable law
 20 25 to be performed in order to perfect the transfer as against
 20 26 liens or a bona fide purchaser's rights are performed within
 20 27 twenty-one days or any period expressly allowed by the law,
 20 28 whichever is less.  A transfer to secure a future loan, if a
 20 29 loan is actually made, or a transfer which becomes security
 20 30 for a future loan, shall have the same effect as a transfer
 20 31 for or on account of a new and contemporaneous consideration.
 20 32    e.  If a lien voidable under paragraph "a", subparagraph
 20 33 (2), has been dissolved by the furnishing of a bond or other
 20 34 obligation, the surety on which has been indemnified directly
 20 35 or indirectly by the transfer or the creation of a lien upon
 21  1 property of a funeral establishment before the filing of a
 21  2 petition under this chapter which results in a liquidation
 21  3 order, the indemnifying transfer or lien is also voidable.
 21  4    f.  The property affected by a lien voidable under
 21  5 paragraphs "a" and "e" is discharged from the lien.  The
 21  6 property and any of the indemnifying property transferred to
 21  7 or for the benefit of a surety shall pass to the liquidator.
 21  8 However, the court may on due notice order a lien to be
 21  9 preserved for the benefit of the estate and the court may
 21 10 direct that the conveyance be executed to evidence the title
 21 11 of the liquidator.
 21 12    g.  The court shall have summary jurisdiction of a
 21 13 proceeding by the liquidator to hear and determine the rights
 21 14 of the parties under this section.  Reasonable notice of
 21 15 hearing in the proceeding shall be given to all parties in
 21 16 interest, including the obligee of a releasing bond or other
 21 17 like obligation.  Where an order is entered for the recovery
 21 18 of indemnifying property in kind or for the avoidance of an
 21 19 indemnifying lien, upon application of any party in interest,
 21 20 the court shall in the same proceeding ascertain the value of
 21 21 the property or lien.  If the value is less than the amount
 21 22 for which the property is indemnified or less than the amount
 21 23 of the lien, the transferee or lienholder may elect to retain
 21 24 the property or lien upon payment of its value, as ascertained
 21 25 by the court, to the liquidator within the time as fixed by
 21 26 the court.
 21 27    h.  The liability of a surety under a releasing bond or
 21 28 other like obligation is discharged to the extent of the value
 21 29 of the indemnifying property recovered or the indemnifying
 21 30 lien nullified and avoided by the liquidator.  Where the
 21 31 property is retained under paragraph "g", the liability of the
 21 32 surety is discharged to the extent of the amount paid to the
 21 33 liquidator.
 21 34    i.  If a creditor has been preferred for property which
 21 35 becomes a part of the funeral establishment's estate, and
 22  1 afterward in good faith gives the funeral establishment
 22  2 further credit without security of any kind, the amount of the
 22  3 new credit remaining unpaid at the time of the petition may be
 22  4 set off against the preference which would otherwise be
 22  5 recoverable from the creditor.
 22  6    j.  If within four months before the filing of a successful
 22  7 petition for liquidation under this chapter, or at any time in
 22  8 contemplation of a proceeding to liquidate, a funeral
 22  9 establishment, directly or indirectly, pays money or transfers
 22 10 property to an attorney for services rendered or to be
 22 11 rendered, the transaction may be examined by the court on its
 22 12 own motion or shall be examined by the court on petition of
 22 13 the liquidator.  The payment or transfer shall be held valid
 22 14 only to the extent of a reasonable amount to be determined by
 22 15 the court.  The excess may be recovered by the liquidator for
 22 16 the benefit of the estate.  However, where the attorney is in
 22 17 a position of influence in the funeral establishment or an
 22 18 affiliate, payment of any money or the transfer of any
 22 19 property to the attorney for services rendered or to be
 22 20 rendered shall be governed by the provision of paragraph "a",
 22 21 subparagraph (2), subparagraph subdivision (d).
 22 22    k.  (1)  An officer, manager, employee, shareholder,
 22 23 subscriber, attorney, or any other person acting on behalf of
 22 24 the funeral establishment who knowingly participates in giving
 22 25 any preference when the person has reasonable cause to believe
 22 26 the funeral establishment is or is about to become insolvent
 22 27 at the time of the preference is personally liable to the
 22 28 liquidator for the amount of the preference.  There is an
 22 29 inference that reasonable cause exists if the transfer was
 22 30 made within four months before the date of filing of this
 22 31 successful petition for liquidation.
 22 32    (2)  A person receiving property from the funeral
 22 33 establishment or the benefit of the property of the funeral
 22 34 establishment as a preference voidable under paragraph "a" is
 22 35 personally liable for the property and shall account to the
 23  1 liquidator.
 23  2    (3)  This subsection shall not prejudice any other claim by
 23  3 the liquidator against any person.
 23  4    10.  CLAIMS OF HOLDER OF VOID OR VOIDABLE RIGHTS.
 23  5    a.  A claim of a creditor who has received or acquired a
 23  6 preference, lien, conveyance, transfer, assignment, or
 23  7 encumbrance, voidable under this chapter, shall not be allowed
 23  8 unless the creditor surrenders the preference, lien,
 23  9 conveyance, transfer, assignment, or encumbrance.  If the
 23 10 avoidance is effected by a proceeding in which a final
 23 11 judgment has been entered, the claim shall not be allowed
 23 12 unless the money is paid or the property is delivered to the
 23 13 liquidator within thirty days from the date of the entering of
 23 14 the final judgment.  However, the court having jurisdiction
 23 15 over the liquidation may allow further time if there is an
 23 16 appeal or other continuation of the proceeding.
 23 17    b.  A claim allowable under paragraph "a" by reason of a
 23 18 voluntary or involuntary avoidance, preference, lien,
 23 19 conveyance, transfer, assignment, or encumbrance may be filed
 23 20 as an excused late filing under subsection 12, if filed within
 23 21 thirty days from the date of the avoidance or within the
 23 22 further time allowed by the court under paragraph "a".
 23 23    11.  LIQUIDATOR'S PROPOSAL TO DISTRIBUTE ASSETS.
 23 24    a.  From time to time as assets become available, the
 23 25 liquidator shall make application to the court for approval of
 23 26 a proposal to disburse assets out of marshaled assets.
 23 27    b.  The proposal shall at least include provisions for all
 23 28 of the following:
 23 29    (1)  Reserving amounts for the payment of all the
 23 30 following:
 23 31    (a)  Expenses of administration.
 23 32    (b)  To the extent of the value of the security held, the
 23 33 payment of claims of secured creditors.
 23 34    (c)  Claims falling within the priorities established in
 23 35 subsection 18, paragraphs "a" and "b".
 24  1    (2)  Disbursement of the assets marshaled to date and
 24  2 subsequent disbursement of assets as they become available.
 24  3    c.  Action on the application may be taken by the court
 24  4 provided that the liquidator's proposal complies with
 24  5 paragraph "b".
 24  6    12.  FILING OF CLAIMS.
 24  7    a.  Proof of all claims shall be filed with the liquidator
 24  8 in the form required by subsection 13 on or before the last
 24  9 day for filing specified in the notice required under
 24 10 subsection 4.
 24 11    b.  The liquidator may permit a claimant making a late
 24 12 filing to share in distributions, whether past or future, as
 24 13 if the claimant were not late, to the extent that the payment
 24 14 will not prejudice the orderly administration of the
 24 15 liquidation under any of the following circumstances:
 24 16    (1)  The existence of the claim was not known to the
 24 17 claimant and that the claimant filed the claim as promptly as
 24 18 reasonably possible after learning of it.
 24 19    (2)  A transfer to a creditor was avoided under subsections
 24 20 7 through 9, or was voluntarily surrendered under subsection
 24 21 10, and that the filing satisfies the conditions of subsection
 24 22 10.
 24 23    (3)  The valuation under subsection 17 of security held by
 24 24 a secured creditor shows a deficiency, which is filed within
 24 25 thirty days after the valuation.
 24 26    c.  The liquidator may consider any claim filed late and
 24 27 permit the claimant to receive distributions which are
 24 28 subsequently declared on any claims of the same or lower
 24 29 priority if the payment does not prejudice the orderly
 24 30 administration of the liquidation.  The late-filing claimant
 24 31 shall receive at each distribution the same percentage of the
 24 32 amount allowed on the claim as is then being paid to claimants
 24 33 of any lower priority.  This shall continue until the claim
 24 34 has been paid in full.
 24 35    13.  PROOF OF CLAIM.
 25  1    a.  Proof of claim shall consist of a statement signed by
 25  2 the claimant that includes all of the following that are
 25  3 applicable:
 25  4    (1)  The particulars of the claim, including the
 25  5 consideration given for it.
 25  6    (2)  The identity and amount of the security on the claim.
 25  7    (3)  The payments, if any, made on the debt.
 25  8    (4)  A statement that the sum claimed is justly owing and
 25  9 that there is no setoff, counterclaim, or defense to the
 25 10 claim.
 25 11    (5)  Any right of priority of payment or other specific
 25 12 right asserted by the claimant.
 25 13    (6)  A copy of the written instrument which is the
 25 14 foundation of the claim.
 25 15    (7)  The name and address of the claimant and the attorney
 25 16 who represents the claimant, if any.
 25 17    b.  A claim need not be considered or allowed if it does
 25 18 not contain all the information identified in paragraph "a"
 25 19 which is applicable.  The liquidator may require that a
 25 20 prescribed form be used and may require that other information
 25 21 and documents be included.
 25 22    c.  At any time the liquidator may request the claimant to
 25 23 present information or evidence supplementary to that required
 25 24 under paragraph "a", and may take testimony under oath,
 25 25 require production of affidavits or depositions, or otherwise
 25 26 obtain additional information or evidence.
 25 27    d.  A judgment or order against a funeral establishment
 25 28 entered after the date of filing of a successful petition for
 25 29 liquidation, or a judgment or order against the funeral
 25 30 establishment entered at any time by default or by collusion
 25 31 need not be considered as evidence of liability or of the
 25 32 amount of damages.  A judgment or order against a funeral
 25 33 establishment before the filing of the petition need not be
 25 34 considered as evidence of liability or of the amount of
 25 35 damages.
 26  1    14.  SPECIAL CLAIMS.
 26  2    a.  A claim may be allowed even if contingent, if it is
 26  3 filed pursuant to subsection 12.  The claim may be allowed and
 26  4 the claimant may participate in all distributions declared
 26  5 after it is filed to the extent that it does not prejudice the
 26  6 orderly administration of the liquidation.
 26  7    b.  Claims that are due except for the passage of time
 26  8 shall be treated as absolute claims are treated.  However, the
 26  9 claims may be discounted at the legal rate of interest.
 26 10    c.  Claims made under employment contracts by directors,
 26 11 principal officers, or persons in fact performing similar
 26 12 functions or having similar powers are limited to payment for
 26 13 services rendered prior to the issuance of an order of
 26 14 liquidation under subsection 2.
 26 15    15.  DISPUTED CLAIMS.
 26 16    a.  If a claim is denied in whole or in part by the
 26 17 liquidator, written notice of the determination shall be given
 26 18 to the claimant or the claimant's attorney by first class mail
 26 19 at the address shown in the proof of claim.  Within sixty days
 26 20 from the mailing of the notice, the claimant may file
 26 21 objections with the liquidator.  Unless a filing is made, the
 26 22 claimant shall not further object to the determination.
 26 23    b.  If objections are filed with the liquidator and the
 26 24 liquidator does not alter the denial of the claim as a result
 26 25 of the objections, the liquidator shall ask the court for a
 26 26 hearing as soon as practicable and give notice of the hearing
 26 27 by first class mail to the claimant or the claimant's attorney
 26 28 and to any other persons directly affected.  The notice shall
 26 29 be given not less than ten nor more than thirty days before
 26 30 the date of the hearing.  The matter shall be heard by the
 26 31 court or by a court-appointed referee.  The referee shall
 26 32 submit findings of fact along with a recommendation.
 26 33    16.  CLAIMS OF OTHER PERSON.  If a creditor, whose claim
 26 34 against a funeral establishment is secured in whole or in part
 26 35 by the undertaking of another person, fails to prove and file
 27  1 that claim, then the other person may do so in the creditor's
 27  2 name and shall be subrogated to the rights of the creditor,
 27  3 whether the claim has been filed by the creditor or by the
 27  4 other person in the creditor's name to the extent that the
 27  5 other person discharges the undertaking.  However, in the
 27  6 absence of an agreement with the creditor to the contrary, the
 27  7 other person is not entitled to any distribution until the
 27  8 amount paid to the creditor on the undertaking plus the
 27  9 distributions paid on the claim from the funeral
 27 10 establishment's estate to the creditor equal the amount of the
 27 11 entire claim of the creditor.  An excess received by the
 27 12 creditor shall be held by the creditor in trust for the other
 27 13 person.
 27 14    17.  SECURED CREDITOR'S CLAIMS.
 27 15    a.  The value of security held by a secured creditor shall
 27 16 be determined in one of the following ways, as the court may
 27 17 direct:
 27 18    (1)  By converting the security into money according to the
 27 19 terms of the agreement pursuant to which the security was
 27 20 delivered to the creditors.
 27 21    (2)  By agreement, arbitration, compromise, or litigation
 27 22 between the creditor and the liquidator.
 27 23    b.  The determination shall be under the supervision and
 27 24 control of the court with due regard for the recommendation of
 27 25 the liquidator.  The amount so determined shall be credited
 27 26 upon the secured claim.  A deficiency shall be treated as an
 27 27 unsecured claim.  If the claimant surrenders the security to
 27 28 the liquidator, the entire claim shall be allowed as if
 27 29 unsecured.
 27 30    18.  PRIORITY OF DISTRIBUTION.  The priority of
 27 31 distribution of claims from the funeral establishment's estate
 27 32 shall be in accordance with the order in which each class of
 27 33 claims is set forth.  Claims in each class shall be paid in
 27 34 full or adequate funds retained for the payment before the
 27 35 members of the next class receive any payment.  Subclasses
 28  1 shall not be established within a class.  The order of
 28  2 distribution of claims is as follows:
 28  3    a.  CLASS 1.  The costs and expenses of administration,
 28  4 including but not limited to the following:
 28  5    (1)  The actual and necessary costs of preserving or
 28  6 recovering the assets of the funeral establishment.
 28  7    (2)  Compensation for all authorized services rendered in
 28  8 the liquidation.
 28  9    (3)  Necessary filing fees.
 28 10    (4)  The fees and mileage payable to witnesses.
 28 11    (5)  Authorized reasonable attorney's fees and other
 28 12 professional services rendered in the liquidation.
 28 13    b.  CLASS 2.  Reasonable compensation to employees for
 28 14 services performed to the extent that they do not exceed two
 28 15 months of monetary compensation and represent payment for
 28 16 services performed within one year before the filing of the
 28 17 petition for liquidation.  Officers and directors are not
 28 18 entitled to the benefit of this priority.  The priority is in
 28 19 lieu of other similar priority which may be authorized by law
 28 20 as to wages or compensation of employees.
 28 21    c.  CLASS 3.  Claims under at-need and preneed funeral
 28 22 contracts.
 28 23    d.  CLASS 4.  Claims of general creditors.
 28 24    e.  CLASS 5.  Claims of the federal or any state or local
 28 25 government.  Claims, including those of a governmental body
 28 26 for a penalty or forfeiture, are allowed in this class only to
 28 27 the extent of the pecuniary loss sustained from the act,
 28 28 transaction, or proceeding out of which the penalty or
 28 29 forfeiture arose, with reasonable and actual costs incurred.
 28 30 The remainder of such claims shall be postponed to the class
 28 31 of claims under paragraph "g".
 28 32    f.  CLASS 6.  Claims filed late or any other claims other
 28 33 than claims under paragraph "g".
 28 34    g.  CLASS 7.  The claims of shareholders or other owners.
 28 35    19.  LIQUIDATOR'S RECOMMENDATIONS TO THE COURT.
 29  1    a.  The liquidator shall review claims duly filed in the
 29  2 liquidation and shall make further investigation as necessary.
 29  3 The liquidator may compound, compromise, or in any other
 29  4 manner negotiate the amount for which claims will be
 29  5 recommended to the court except where the liquidator is
 29  6 required by law to accept claims as settled by a person or
 29  7 organization.  Unresolved disputes shall be determined under
 29  8 subsection 15.  As soon as practicable, the liquidator shall
 29  9 present to the court a report of the claims against the
 29 10 funeral establishment with the liquidator's recommendations.
 29 11 The report shall include the name and address of each claimant
 29 12 and the amount of the claim finally recommended.
 29 13    b.  The court may approve, disapprove, or modify the report
 29 14 on claims by the liquidator.  Reports not modified by the
 29 15 court within sixty days following submission by the liquidator
 29 16 shall be treated by the liquidator as allowed claims, subject
 29 17 to later modification or to rulings made by the court pursuant
 29 18 to subsection 15.  A claim under a policy of insurance shall
 29 19 not be allowed for an amount in excess of the applicable
 29 20 policy limits.
 29 21    20.  DISTRIBUTION OF ASSETS.  Under the direction of the
 29 22 court, the liquidator shall pay distributions in a manner that
 29 23 will assure the proper recognition of priorities and a
 29 24 reasonable balance between the expeditious completion of the
 29 25 liquidation and the protection of unliquidated and
 29 26 undetermined claims, including third-party claims.
 29 27 Distribution of assets in kind may be made at valuations set
 29 28 by agreement between the liquidator and the creditor and
 29 29 approved by the court.
 29 30    21.  UNCLAIMED AND WITHHELD FUNDS.
 29 31    a.  Unclaimed funds subject to distribution remaining in
 29 32 the liquidator's hands when the liquidator is ready to apply
 29 33 to the court for discharge, including the amount distributable
 29 34 to a creditor, owner, or other person who is unknown or cannot
 29 35 be found, shall be deposited with the treasurer of state, and
 30  1 shall be paid without interest, except as provided in
 30  2 subsection 18, to the person entitled or the person's legal
 30  3 representative upon proof satisfactory to the treasurer of
 30  4 state of the right to the funds.  An amount on deposit not
 30  5 claimed within six years from the discharge of the liquidator
 30  6 is deemed to have been abandoned and shall become the property
 30  7 of the state without formal escheat proceedings and be
 30  8 transferred to the insurance division regulatory fund.
 30  9    b.  Funds withheld under subsection 14 and not distributed
 30 10 shall upon discharge of the liquidator be deposited with the
 30 11 treasurer of state and paid pursuant to subsection 18.  Sums
 30 12 remaining which under subsection 18 would revert to the
 30 13 undistributed assets of the funeral establishment shall be
 30 14 transferred to the insurance division regulatory fund and
 30 15 become the property of the state as provided under paragraph
 30 16 "a", unless the commissioner in the commissioner's discretion
 30 17 petitions the court to reopen the liquidation pursuant to
 30 18 subsection 23.
 30 19    c.  Notwithstanding any other provision of this chapter,
 30 20 funds as identified in paragraph "a", with the approval of the
 30 21 court, shall be made available to the commissioner for use in
 30 22 the detection and prevention of future insolvencies.  The
 30 23 commissioner shall hold these funds in the insurance division
 30 24 regulatory fund and shall pay without interest, except as
 30 25 provided in subsection 18, to the person entitled to the funds
 30 26 or the person's legal representative upon proof satisfactory
 30 27 to the commissioner of the person's right to the funds.  The
 30 28 funds shall be held by the commissioner for a period of two
 30 29 years at which time the rights and duties to the unclaimed
 30 30 funds shall vest in the commissioner.
 30 31    22.  TERMINATION OF PROCEEDINGS.
 30 32    a.  When all assets justifying the expense of collection
 30 33 and distribution have been collected and distributed under
 30 34 this chapter, the liquidator shall apply to the court for
 30 35 discharge.  The court may grant the discharge and make any
 31  1 other orders, including an order to transfer remaining funds
 31  2 that are uneconomical to distribute, as appropriate.
 31  3    b.  Any other person may apply to the court at any time for
 31  4 an order under paragraph "a".  If the application is denied,
 31  5 the applicant shall pay the costs and expenses of the
 31  6 liquidator in resisting the application, including a
 31  7 reasonable attorney's fee.
 31  8    23.  REOPENING LIQUIDATION.  At any time after the
 31  9 liquidation proceeding has been terminated and the liquidator
 31 10 discharged, the commissioner or other interested party may
 31 11 petition the court to reopen the proceedings for good cause
 31 12 including the discovery of additional assets.  The court shall
 31 13 order the proceeding reopened if it is satisfied that there is
 31 14 justification for the reopening.
 31 15    24.  DISPOSITION OF RECORDS DURING AND AFTER TERMINATION OF
 31 16 LIQUIDATION.  If it appears to the commissioner that the
 31 17 records of a funeral establishment in process of liquidation
 31 18 or completely liquidated are no longer useful, the
 31 19 commissioner may recommend to the court and the court shall
 31 20 direct what records shall be retained for future reference and
 31 21 what records shall be destroyed.
 31 22    25.  EXTERNAL AUDIT OF RECEIVER'S BOOKS.  The court may
 31 23 order audits to be made of the books of the commissioner
 31 24 relating to a receivership established under this chapter, and
 31 25 a report of each audit shall be filed with the commissioner
 31 26 and with the court.  The books, records, and other documents
 31 27 of the receivership shall be made available to the auditor at
 31 28 any time without notice.  The expense of an audit shall be
 31 29 considered a cost of administration of the receivership.
 31 30    Sec. 11.  NEW SECTION.  523A.23  MINIMUM FIDELITY BOND OR
 31 31 INSURANCE POLICY.
 31 32    The seller, in connection with an offer or sale of an
 31 33 agreement referred to in section 523A.1, shall obtain and
 31 34 maintain at all times a fidelity bond or insurance policy
 31 35 covering losses resulting from dishonest or fraudulent acts
 32  1 committed by employees of the seller which cause a loss,
 32  2 theft, or misappropriation of cash, property, or a negotiable
 32  3 instrument submitted to the seller pursuant to the agreement.
 32  4 The fidelity bond or insurance policy must be maintained in an
 32  5 amount not less than fifty thousand dollars.
 32  6    Sec. 12.  Section 523E.1, subsection 1, Code 1995, is
 32  7 amended to read as follows:
 32  8    1.  If an agreement is made by a person to furnish, upon
 32  9 the future death of a person named or implied in the
 32 10 agreement, cemetery merchandise, a minimum of one hundred
 32 11 twenty-five percent of the wholesale cost of the cemetery
 32 12 merchandise, based upon the current advertised prices
 32 13 available from a manufacturer or wholesaler who has delivered
 32 14 the same or substantially the same type of merchandise to the
 32 15 seller during the last twelve months, shall be and remain
 32 16 trust funds until purchase of the merchandise or the
 32 17 occurrence of the death of the person for whose benefit the
 32 18 funds were paid, unless the funds are sooner released to the
 32 19 person making the payment by mutual consent of the parties.
 32 20 Payments otherwise subject to this section are not exempt
 32 21 merely because they are held in certificates of deposit.  The
 32 22 commissioner may adopt rules to prohibit the commingling of
 32 23 trust funds with other funds of the seller.
 32 24    Sec. 13.  Section 523E.1, Code 1995, is amended by adding
 32 25 the following new subsection:
 32 26    NEW SUBSECTION.  5.  An agreement may be funded by
 32 27 insurance proceeds derived from a policy issued by an
 32 28 insurance company authorized to conduct business in this
 32 29 state.  Such funding may be in lieu of a trust fund if the
 32 30 payments are made directly to the insurance company by the
 32 31 purchaser of the agreement.
 32 32    Sec. 14.  Section 523E.2, subsection 1, paragraphs a and c,
 32 33 Code 1995, are amended to read as follows:
 32 34    a.  All funds held in trust under section 523E.1 shall be
 32 35 deposited in a state or federally insured bank, savings and
 33  1 loan association, or credit union authorized to conduct
 33  2 business in this state, or trust department thereof of such
 33  3 bank, savings and loan association, or credit union, or in a
 33  4 trust company authorized to conduct business in this state,
 33  5 within fifteen days after the close of the month of receipt of
 33  6 the funds and shall be held as provided in paragraph "g" for
 33  7 the designated beneficiary until released pursuant to section
 33  8 523E.1.
 33  9    c.  The seller under an agreement referred to in section
 33 10 523E.1 shall file with the commissioner not later than March 1
 33 11 of each year a report including the following information:
 33 12    (1)  The name and address of the seller and the name and
 33 13 address of the establishment that will provide the cemetery
 33 14 merchandise.
 33 15    (2)  The name of the purchaser, beneficiary, and the amount
 33 16 of each agreement under section 523E.1 made in the preceding
 33 17 year and the date on which it was made.  The balance of each
 33 18 trust account as of the end of the immediately preceding
 33 19 calendar year, identified by the name of the purchaser or the
 33 20 beneficiary, and a report of any amounts withdrawn from trust
 33 21 and the reason for each withdrawal.
 33 22    (3)  The total value of agreements subject to section
 33 23 523E.1 entered into, the total amount paid pursuant to those
 33 24 agreements, and the total amount deposited in trust as
 33 25 required under section 523E.1, during the preceding year.  A
 33 26 description of insurance funding outstanding at the end of the
 33 27 immediately preceding calendar year, identified by the name of
 33 28 the purchaser or the beneficiary, and a report of any
 33 29 insurance payments received by the seller.
 33 30    (4)  The amount of any payments received pursuant to
 33 31 agreements reported in previous years in accordance with
 33 32 subparagraphs (2) and (3) and the amount of those payments
 33 33 deposited in trust for each purchaser.
 33 34    (5)  The change in status of any trust account, for each
 33 35 purchaser, any other amounts withdrawn from trust and the
 34  1 reason for each withdrawal.  However, regular increments of
 34  2 interest or income need not be reported on a yearly basis.
 34  3    (6)  The name and address of the financial institution in
 34  4 which trust funds were deposited, and the name and address of
 34  5 each insurance company which funds agreements under section
 34  6 523E.1.
 34  7    (7)  The name and address of each purchaser of cemetery
 34  8 merchandise delivered in lieu of trusting pursuant to section
 34  9 523E.1, and a description of that merchandise for each
 34 10 purchaser.
 34 11    (8) (4)  The A complete inventory of cemetery merchandise
 34 12 and its location in the seller's possession that has been
 34 13 delivered in lieu of trusting pursuant to section 523E.1.
 34 14    (9)  Other information reasonably required by the
 34 15 commissioner for purposes of administration of this chapter.
 34 16    The information required by subparagraphs (7) and (8) shall
 34 17 include, including the location of the merchandise, serial
 34 18 numbers or warehouse receipt numbers, identified by the name
 34 19 of the purchaser or the beneficiary, and a verified statement
 34 20 of a certified public accountant that the certified public
 34 21 accountant has conducted a physical inventory of the cemetery
 34 22 merchandise specified in subparagraph (8) and that each item
 34 23 of that merchandise is in the seller's possession at the
 34 24 specified location.  The statement shall be on a form
 34 25 prescribed by the commissioner.  The commissioner shall permit
 34 26 the filing of a unified annual report by a seller subject to
 34 27 both chapter 523A and this chapter.
 34 28    (5)  The name of the purchaser, beneficiary, and the amount
 34 29 of each agreement referred to in section 523E.1 made in the
 34 30 preceding year and the date on which it was made.
 34 31    (6)  Other information reasonably required by the
 34 32 commissioner for purposes of administration of this chapter.
 34 33    The report shall be accompanied by a filing fee determined
 34 34 by the commissioner which shall be sufficient to defray the
 34 35 costs of administering this chapter.
 35  1    Sec. 15.  Section 523E.2, subsection 6, Code 1995, is
 35  2 amended to read as follows:
 35  3    6.  This chapter does not prohibit the funding of an
 35  4 agreement otherwise subject to section 523E.1 by insurance
 35  5 proceeds derived from a policy issued by an insurance company
 35  6 authorized to conduct business in this state.  The seller of
 35  7 an agreement subject to this chapter which is to be funded by
 35  8 insurance proceeds shall obtain all permits required to be
 35  9 obtained under this chapter and comply with the reporting
 35 10 requirements of this section.
 35 11    Sec. 16.  Section 523E.8, subsection 1, paragraphs e, h,
 35 12 and j, Code 1995, are amended to read as follows:
 35 13    e.  State clearly whether the agreement is a guaranteed
 35 14 price contract or a nonguaranteed price contract.  Each
 35 15 nonguaranteed price contract shall contain in twelve point
 35 16 bold type, an explanation of the consequences in substantially
 35 17 the following language:
 35 18    THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS CONTRACT
 35 19 ARE SUBJECT TO CHANGE IN THE FUTURE.  ANY FUNDS PAID UNDER
 35 20 THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED, TOGETHER WITH
 35 21 ACCRUED INCOME, TOWARD THE FINAL COSTS OF THE MERCHANDISE OR
 35 22 SERVICES CONTRACTED FOR.  ADDITIONAL CHARGES MAY BE REQUIRED.
 35 23    h.  Explain the disposition of the interest and disclose
 35 24 what fees and expenses may be charged if incurred income
 35 25 generated from investments, include a statement of fees,
 35 26 expenses, and taxes which may be deducted, and include a
 35 27 statement of the buyer's responsibility for income taxes owed
 35 28 on the income, if applicable.
 35 29    j.  State the name and address of the commissioner.
 35 30 Include an explanation of regulatory oversight by the
 35 31 insurance division in twelve point bold type, in substantially
 35 32 the following language:
 35 33    THIS CONTRACT MUST BE REPORTED TO THE IOWA INSURANCE
 35 34 DIVISION BY THE FIRST DAY OF MARCH OF THE FOLLOWING YEAR.  YOU
 35 35 MAY CALL THE INSURANCE DIVISION AT (INSERT TELEPHONE NUMBER)
 36  1 TO CONFIRM THAT YOUR CONTRACT HAS BEEN REPORTED.  WRITTEN
 36  2 INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE FOLLOWING
 36  3 ADDRESS:  IOWA SECURITIES BUREAU (INSERT ADDRESS).
 36  4    Sec. 17.  Section 523E.8, subsection 1, Code 1995, is
 36  5 amended by adding the following new subsection:
 36  6    NEW SUBSECTION.  1A.  The commissioner may adopt rules
 36  7 establishing disclosure and format requirements to promote
 36  8 consumers' understanding of the cemetery merchandise purchased
 36  9 and the available funding mechanisms under an agreement for
 36 10 cemetery merchandise under this chapter.
 36 11    Sec. 18.  Section 523E.8, Code 1995, is amended by adding
 36 12 the following new subsection:
 36 13    NEW SUBSECTION.  3.  The seller shall disclose at the time
 36 14 an application is made by an individual and prior to accepting
 36 15 the applicant's initial premium or deposit for a preneed
 36 16 funeral contract or prearrangement subject to section 523E.1
 36 17 which is funded by a life insurance policy, the following
 36 18 information:
 36 19    a.  That a life insurance policy is involved or being used
 36 20 to fund an agreement.
 36 21    b.  The nature of the relationship among the soliciting
 36 22 agent or agents, the provider of the funeral or cemetery
 36 23 merchandise or services, the administrator, and any other
 36 24 person.
 36 25    c.  The relationship of the life insurance policy to the
 36 26 funding of the prearrangement and the nature and existence of
 36 27 any guarantees relating to the prearrangement.
 36 28    d.  The impact on the prearrangement of the following:
 36 29    (1)  Changes in the life insurance policy including, but
 36 30 not limited to, changes in the assignment, beneficiary
 36 31 designation, or use of proceeds.
 36 32    (2)  Any penalties to be incurred by the policyholder as a
 36 33 result of the failure to make premium payments.
 36 34    (3)  Penalties to be incurred or cash to be received as a
 36 35 result of the cancellation or surrender of the life insurance
 37  1 policy.
 37  2    e.  A list of merchandise and services which are applied or
 37  3 contracted for in the prearrangement and all relevant
 37  4 information concerning the price of the merchandise and
 37  5 services, including an indication that the purchase price is
 37  6 either guaranteed at the time of purchase or to be determined
 37  7 at the time of need.
 37  8    f.  All relevant information concerning what occurs and
 37  9 whether any entitlements or obligations arise if there is a
 37 10 difference between the proceeds of the life insurance policy
 37 11 and the amount actually needed to fund the agreement.
 37 12    g.  Any penalties or restrictions, including but not
 37 13 limited to, geographic restrictions or the inability of the
 37 14 provider to perform, on the delivery of merchandise, services,
 37 15 or the prearrangement guarantee.
 37 16    h.  That a sales commission or other form of compensation
 37 17 is being paid and, if so, the identity of the individuals or
 37 18 entities to whom it is paid.
 37 19    Sec. 19.  Section 523E.20, Code 1995, is amended to read as
 37 20 follows:
 37 21    523E.20  INSURANCE DIVISION'S REGULATORY FUND.
 37 22    The insurance division may authorize the creation of a
 37 23 special revenue fund in the state treasury, to be known as the
 37 24 insurance division regulatory fund.  Commencing July 1, 1990,
 37 25 and annually thereafter, the The commissioner shall allocate
 37 26 annually from the fees paid pursuant to section 523E.2, one
 37 27 dollar two dollars for each agreement reported on an
 37 28 establishment permit holder's annual report for deposit to the
 37 29 regulatory fund.  The remainder of the fees collected pursuant
 37 30 to section 523E.2 shall be deposited into the general fund of
 37 31 the state.  In addition, on May 1 of 1994 1996 and 1995 1997,
 37 32 the commissioner, to the extent necessary to fund consumer
 37 33 education, audits, investigations, payments under contract
 37 34 with licensed establishments to provide funeral and cemetery
 37 35 merchandise or services in the event of statutory
 38  1 noncompliance by the initial seller, liquidations, and
 38  2 receiverships, shall assess establishment permit holders five
 38  3 two dollars for each agreement reported on the establishment
 38  4 permit holder's annual report of sales executed during the
 38  5 preceding year, which shall be deposited in the insurance
 38  6 division regulatory fund.  However, if the balance of the
 38  7 regulatory fund on that July 1 exceeds two hundred thousand
 38  8 dollars, the allocation to the regulatory fund shall not be
 38  9 made and the total sum of the fees paid pursuant to section
 38 10 523E.2 shall be deposited in the general fund of the state.
 38 11 The moneys in the regulatory fund shall be retained in the
 38 12 fund.  The moneys are appropriated and, subject to
 38 13 authorization by the commissioner, may be used to pay
 38 14 auditors, audit expenses, investigative expenses, and the
 38 15 expenses of receiverships established pursuant to section
 38 16 523E.19.  An annual assessment shall not be imposed if the
 38 17 current balance of the fund exceeds two hundred thousand
 38 18 dollars.
 38 19    Sec. 20.  NEW SECTION.  523E.21  LICENSE REVOCATION &endash;
 38 20 RECOMMENDATION BY COMMISSIONER TO BOARD OF MORTUARY SCIENCE
 38 21 EXAMINERS.
 38 22    Upon a determination by the commissioner that grounds exist
 38 23 for an administrative license revocation action by the board
 38 24 of mortuary science examiners under chapter 156, the
 38 25 commissioner may forward to the board the grounds for the
 38 26 determination, including all evidence in the possession of the
 38 27 commissioner, so that the board may proceed with the matter as
 38 28 deemed appropriate.
 38 29    Sec. 21.  NEW SECTION.  523E.22  MINIMUM FIDELITY BOND OR
 38 30 INSURANCE POLICY.
 38 31    The seller, in connection with an offer or sale of an
 38 32 agreement referred to in section 523E.1, shall obtain and
 38 33 maintain at all times a fidelity bond or insurance policy
 38 34 covering losses resulting from dishonest or fraudulent acts
 38 35 committed by employees of the seller which cause a loss,
 39  1 theft, or misappropriation of cash, property, or a negotiable
 39  2 instrument submitted to the seller pursuant to the agreement.
 39  3 The fidelity bond or insurance policy must be maintained in an
 39  4 amount not less than fifty thousand dollars.
 39  5    Sec. 22.  NEW SECTION.  523J.1  DEFINITIONS.
 39  6    As used in this chapter, unless the context otherwise
 39  7 requires:
 39  8    1.  "Abandoned cemetery" means any cemetery where there has
 39  9 been a failure to cut grass or weeds or care for graves, grave
 39 10 markers, walls, fences, driveways, and buildings, or for which
 39 11 proper records have not been maintained.
 39 12    2.  "Cemetery" means a cemetery, mausoleum, columbarium, or
 39 13 other space held for the purpose of burial, entombment, or
 39 14 inurnment of human remains, and which is subject to this
 39 15 chapter.
 39 16    3.  "Commissioner" means the commissioner of insurance or
 39 17 the deputy appointed under section 502.601.
 39 18    4.  "Interment rights" means a right of use conveyed by
 39 19 contract or property ownership to inter human rights in a
 39 20 columbarium, grave, mausoleum, lawn crypt, or undeveloped
 39 21 space.
 39 22    5.  "Perpetual care cemetery" means a cemetery which has
 39 23 established a perpetual care fund for the maintenance, repair,
 39 24 and care of all interment spaces subject to perpetual care
 39 25 within the cemetery in compliance with section 566A.3 or
 39 26 566A.4.
 39 27    Sec. 23.  NEW SECTION.  523J.2  CEMETERIES COMMENCING
 39 28 BUSINESS AFTER JULY 1, 1995.
 39 29    A cemetery which is organized or commences business in this
 39 30 state on or after July 1, 1995, shall operate as a perpetual
 39 31 care cemetery and is subject to this chapter and other
 39 32 applicable law.
 39 33    Sec. 24.  NEW SECTION.  523J.3  PERMIT REQUIREMENTS.
 39 34    1.  A perpetual care cemetery shall not sell or offer
 39 35 interment rights to the public without a permit as provided
 40  1 for in this section.
 40  2    2.  Applications for a permit shall be made to and filed
 40  3 with the commissioner on forms approved by the commissioner
 40  4 and accompanied by a filing fee of twenty dollars.  If the
 40  5 application contains the following information, the
 40  6 commissioner shall issue the license:
 40  7    (a)  The name and principal address of the applicant.
 40  8    (b)  The identity of the applicant's owner or owners.
 40  9    (c)  Evidence of a trust fund for cemetery maintenance and
 40 10 care in compliance with section 566A.3 or 566A.4.
 40 11    3.  Each permit issued under this chapter shall expire on
 40 12 June 30 of the year following the date of issuance.
 40 13    Sec. 25.  NEW SECTION.  523J.4  DENIAL, SUSPENSION, OR
 40 14 REVOCATION OF PERMIT.
 40 15    The commissioner, pursuant to chapter 17A, may deny,
 40 16 suspend, or revoke any permit to operate a cemetery if the
 40 17 commissioner finds any of the following:
 40 18    1.  The cemetery has committed a fraudulent practice, or
 40 19 the cemetery's trust assets, warehoused merchandise, surety
 40 20 bonds, or insurance funding are in material noncompliance with
 40 21 chapter 523A or 523E or section 566A.3 or 566A.4.
 40 22    2.  An owner or officer of the cemetery has been convicted
 40 23 of a felony related to the sale of interment rights or the
 40 24 sale of funeral services, funeral merchandise, or cemetery
 40 25 merchandise, as defined in section 523A.5, subsection 2,
 40 26 paragraphs "a" and "b", and section 523E.5, subsection 2,
 40 27 paragraph "a".
 40 28    Sec. 26.  NEW SECTION.  523J.5  LIQUIDATION.
 40 29    1.  GROUNDS FOR LIQUIDATION.  The commissioner may petition
 40 30 the district court for an order directing the commissioner to
 40 31 liquidate a perpetual care cemetery on any of the following
 40 32 grounds:
 40 33    a.  The cemetery's trust fund is in material noncompliance
 40 34 with the requirements of section 566A.3 or 566A.4 and is
 40 35 insolvent.
 41  1    b.  The cemetery's trust fund is in material noncompliance
 41  2 with the requirements of section 566A.3 or 566A.4 and the
 41  3 condition of the cemetery is such that the further transaction
 41  4 of business would be hazardous, financially or otherwise, to
 41  5 its customers or the public.
 41  6    c.  The cemetery has been abandoned.
 41  7    2.  LIQUIDATION ORDER.
 41  8    a.  An order to liquidate the business of a perpetual care
 41  9 cemetery shall appoint the commissioner as liquidator and
 41 10 shall direct the liquidator to immediately take possession of
 41 11 the assets of the cemetery and to administer them under the
 41 12 general supervision of the court.  The liquidator is vested
 41 13 with the title to the property, contracts, and rights of
 41 14 action and the books and records of the cemetery ordered
 41 15 liquidated, wherever located, as of the entry of the final
 41 16 order of liquidation.  The filing or recording of the order
 41 17 with the clerk of court and the recorder of deeds of the
 41 18 county in which its principal office or place of business is
 41 19 located, or, in the case of real estate with the recorder of
 41 20 deeds of the county where the property is located, is notice
 41 21 as a deed, bill of sale, or other evidence of title duly filed
 41 22 or recorded with the recorder of deeds.
 41 23    b.  Upon issuance of an order, the rights and liabilities
 41 24 of a cemetery and of the cemetery's creditors, customers,
 41 25 owners, and other persons interested in the cemetery's estate
 41 26 shall become fixed as of the date of the entry of the order of
 41 27 liquidation, except as provided in subsection 14.
 41 28    c.  At the time of petitioning for an order of liquidation,
 41 29 or at any time after the time of petitioning, the
 41 30 commissioner, after making appropriate findings of a
 41 31 cemetery's insolvency, may petition the court for a
 41 32 declaration of insolvency.  After providing notice and hearing
 41 33 as it deems proper, the court may make the declaration.
 41 34    d.  An order issued under this section shall require
 41 35 accounting to the court by the liquidator.  Accountings, at a
 42  1 minimum, must include all funds received or disbursed by the
 42  2 liquidator during the current period.  An accounting shall be
 42  3 filed within one year of the liquidation order and at such
 42  4 other times as the court may require.
 42  5    e.  Within five days after the initiation of an appeal of
 42  6 an order of liquidation, which order has not been stayed, the
 42  7 commissioner shall present for the court's approval a plan for
 42  8 the continued performance of the cemetery's obligations during
 42  9 the pendency of an appeal.  The plan shall provide for the
 42 10 continued performance of interment rights contracts in the
 42 11 normal course of events, notwithstanding the grounds alleged
 42 12 in support of the order of liquidation including the ground of
 42 13 insolvency.  If the defendant cemetery's financial condition,
 42 14 in the judgment of the commissioner, will not support the full
 42 15 performance of all obligations during the appeal pendency
 42 16 period, the plan may prefer the claims of certain customers
 42 17 and claimants over creditors and interested parties as well as
 42 18 other customers and claimants, as the commissioner finds to be
 42 19 fair and equitable considering the relative circumstances of
 42 20 such customers and claimants.  The court shall examine the
 42 21 plan submitted by the commissioner and if it finds the plan to
 42 22 be in the best interests of the parties, the court shall
 42 23 approve the plan.  An action shall not lie against the
 42 24 commissioner or any of the commissioner's deputies, agents,
 42 25 clerks, assistants, or attorneys by any party based on
 42 26 preference in an appeal pendency plan approved by the court.
 42 27    3.  POWERS OF LIQUIDATOR.
 42 28    a.  The liquidator may do any of the following:
 42 29    (1)  Appoint a special deputy to act for the liquidator
 42 30 under this chapter, and determine the special deputy's
 42 31 reasonable compensation.  The special deputy shall have all
 42 32 the powers of the liquidator granted by this section.  The
 42 33 special deputy shall serve at the pleasure of the liquidator.
 42 34    (2)  Hire employees and agents, legal counsel, accountants,
 42 35 appraisers, consultants, and other personnel as the
 43  1 commissioner may deem necessary to assist in the liquidation.
 43  2    (3)  With the approval of the court fix reasonable
 43  3 compensation of employees and agents, legal counsel,
 43  4 accountants, appraisers and consultants.
 43  5    (4)  Pay reasonable compensation to persons appointed and
 43  6 defray from the funds or assets of the cemetery all expenses
 43  7 of taking possession of, conserving, conducting, liquidating,
 43  8 disposing of, or otherwise dealing with the business and
 43  9 property of the cemetery.  If the property of the cemetery
 43 10 does not contain sufficient cash or liquid assets to defray
 43 11 the costs incurred, the commissioner may advance the costs so
 43 12 incurred out of the insurance division cemetery fund.  Amounts
 43 13 so advanced for expenses of administration shall be repaid to
 43 14 the insurance division cemetery fund for the use of the
 43 15 division out of the first available moneys of the cemetery.
 43 16    (5)  Hold hearings, subpoena witnesses, and compel their
 43 17 attendance, administer oaths, examine a person under oath, and
 43 18 compel a person to subscribe to the person's testimony after
 43 19 it has been correctly reduced to writing, and in connection to
 43 20 the proceedings require the production of books, papers,
 43 21 records, or other documents which the liquidator deems
 43 22 relevant to the inquiry.
 43 23    (6)  Collect debts and moneys due and claims belonging to
 43 24 the cemetery, wherever located.  Pursuant to this
 43 25 subparagraph, the liquidator may do any of the following:
 43 26    (a)  Institute timely action in other jurisdictions to
 43 27 forestall garnishment and attachment proceedings against
 43 28 debts.
 43 29    (b)  Perform acts as are necessary or expedient to collect,
 43 30 conserve, or protect its assets or property, including the
 43 31 power to sell, compound, compromise, or assign debts for
 43 32 purposes of collection upon terms and conditions as the
 43 33 liquidator deems best.
 43 34    (c)  Pursue any creditor's remedies available to enforce
 43 35 claims.
 44  1    (7)  Conduct public and private sales of the property of
 44  2 the cemetery.
 44  3    (8)  Use assets of the cemetery under a liquidation order
 44  4 to transfer obligations of preneed funeral contracts to a
 44  5 solvent cemetery, if the transfer can be accomplished without
 44  6 prejudice to applicable priorities under subsection 18.
 44  7    (9)  Acquire, hypothecate, encumber, lease, improve, sell,
 44  8 transfer, abandon, or otherwise dispose of or deal with
 44  9 property of the cemetery at its market value or upon terms and
 44 10 conditions as are fair and reasonable.  The liquidator shall
 44 11 also have power to execute, acknowledge, and deliver deeds,
 44 12 assignments, releases, and other instruments necessary to
 44 13 effectuate a sale of property or other transaction in
 44 14 connection with the liquidation.
 44 15    (10)  Borrow money on the security of the cemetery's assets
 44 16 or without security and execute and deliver documents
 44 17 necessary to that transaction for the purpose of facilitating
 44 18 the liquidation.  Money borrowed pursuant to this subparagraph
 44 19 shall be repaid as an administrative expense and have priority
 44 20 over any other class 1 claims under the priority of
 44 21 distribution established in subsection 18.
 44 22    (11)  Enter into contracts as necessary to carry out the
 44 23 order to liquidate and affirm or disavow contracts to which
 44 24 the cemetery is a party.
 44 25    (12)  Continue to prosecute and to institute in the name of
 44 26 the cemetery or in the liquidator's own name any and all suits
 44 27 and other legal proceedings, in this state or elsewhere, and
 44 28 to abandon the prosecution of claims the liquidator deems
 44 29 unprofitable to pursue further.
 44 30    (13)  Prosecute an action on behalf of the creditors,
 44 31 customers, or owners against an officer of the cemetery or any
 44 32 other person.
 44 33    (14)  Remove records and property of the cemetery to the
 44 34 offices of the commissioner or to other places as may be
 44 35 convenient for the purposes of efficient and orderly execution
 45  1 of the liquidation.
 45  2    (15)  Deposit in one or more banks in this state sums as
 45  3 are required for meeting current administration expenses and
 45  4 distributions.
 45  5    (16)  Unless the court orders otherwise, invest funds not
 45  6 currently needed.
 45  7    (17)  File necessary documents for recording in the office
 45  8 of a recorder of deeds or record office in this state or
 45  9 elsewhere where property of the cemetery is located.
 45 10    (18)  Assert defenses available to the cemetery as against
 45 11 third persons including statutes of limitations, statutes of
 45 12 fraud, and the defense of usury.  A waiver of a defense by the
 45 13 cemetery after a petition in liquidation has been filed shall
 45 14 not bind the liquidator.
 45 15    (19)  Exercise and enforce the rights, remedies, and powers
 45 16 of a creditor, customer, or owner, including the power to
 45 17 avoid transfer or lien that may be given by the general law
 45 18 and that is not included within subsections 7 through 9.
 45 19    (20)  Intervene in a proceeding wherever instituted that
 45 20 might lead to the appointment of a receiver or trustee, and
 45 21 act as the receiver or trustee whenever the appointment is
 45 22 offered.
 45 23    (21)  Exercise powers now held or later conferred upon
 45 24 receivers by the laws of this state which are not inconsistent
 45 25 with this chapter.
 45 26    b.  This subsection does not limit the liquidator or
 45 27 exclude the liquidator from exercising a power not listed in
 45 28 paragraph "a" that may be necessary or appropriate to
 45 29 accomplish the purposes of this chapter.
 45 30    4.  NOTICE TO CREDITORS AND OTHERS.
 45 31    a.  Unless the court otherwise directs, the liquidator
 45 32 shall give notice of the liquidation order as soon as possible
 45 33 by doing all of the following:
 45 34    (1)  By first class mail to all persons known or reasonably
 45 35 expected to have claims against the cemetery by mailing a
 46  1 notice to their last known address as indicated by the records
 46  2 of the cemetery.
 46  3    (2)  By publication in a newspaper of general circulation
 46  4 in the county in which the cemetery has its principal place of
 46  5 business and in other locations as the liquidator deems
 46  6 appropriate.
 46  7    b.  Notice to potential claimants under paragraph "a" shall
 46  8 require claimants to file with the liquidator their claims
 46  9 together with proper proofs of the claim under subsection 13
 46 10 on or before a date the liquidator shall specify in the
 46 11 notice.  Claimants shall keep the liquidator informed of their
 46 12 changes of address, if any.
 46 13    c.  If notice is given pursuant to this section, the
 46 14 distribution of assets of the cemetery under this chapter
 46 15 shall be conclusive with respect to claimants, whether or not
 46 16 a claimant actually received notice.
 46 17    5.  ACTIONS BY AND AGAINST LIQUIDATOR.
 46 18    a.  After the issuance of an order appointing a liquidator
 46 19 of a cemetery, an action at law or equity shall not be brought
 46 20 against the cemetery in this state or elsewhere, and existing
 46 21 actions shall not be maintained or further presented after
 46 22 issuance of the order.  Whenever in the liquidator's judgment,
 46 23 protection of the estate of the cemetery necessitates
 46 24 intervention in an action against the cemetery that is pending
 46 25 outside this state, the liquidator may intervene in the
 46 26 action.  The liquidator may defend, at the expense of the
 46 27 estate of the cemetery, an action in which the liquidator
 46 28 intervenes under this section.
 46 29    b.  Within two years or such additional time as applicable
 46 30 law may permit, the liquidator, after the issuance of an order
 46 31 for liquidation, may institute an action or proceeding on
 46 32 behalf of the estate of the cemetery upon any cause of action
 46 33 against which the period of limitation fixed by applicable law
 46 34 has not expired at the time of the filing of the petition upon
 46 35 which the order is entered.  If a period of limitation is
 47  1 fixed by agreement for instituting a suit or proceeding upon a
 47  2 claim, or for filing a claim, proof of claim, proof of loss,
 47  3 demand, notice, or the like, or if in a proceeding, judicial
 47  4 or otherwise, a period of limitation is fixed in the
 47  5 proceeding or pursuant to applicable law for taking an action,
 47  6 filing a claim or pleading, or doing an act, and if the period
 47  7 had not expired at the date of the filing of the petition, the
 47  8 liquidator, for the benefit of the estate, may take any action
 47  9 or do any act, required of or permitted to the cemetery,
 47 10 within a period of one hundred eighty days subsequent to the
 47 11 entry of an order for liquidation, or within a further period
 47 12 as is shown to the satisfaction of the court not to be
 47 13 unfairly prejudicial to the other party.
 47 14    c.  A statute of limitation or defense of laches shall not
 47 15 run with respect to an action against a cemetery between the
 47 16 filing of a petition for liquidation against the cemetery and
 47 17 the denial of the petition.  An action against the cemetery
 47 18 that might have been commenced when the petition was filed may
 47 19 be commenced for at least sixty days after the petition is
 47 20 denied.
 47 21    6.  COLLECTION AND LIST OF ASSETS.
 47 22    a.  As soon as practicable after the liquidation order but
 47 23 not later than one hundred twenty days after such order, the
 47 24 liquidator shall prepare in duplicate a list of the cemetery's
 47 25 assets.  The list shall be amended or supplemented as the
 47 26 liquidator may determine.  One copy shall be filed in the
 47 27 office of the clerk of court and one copy shall be retained
 47 28 for the liquidator's files.  Amendments and supplements shall
 47 29 be similarly filed.
 47 30    b.  The liquidator shall reduce the assets to a degree of
 47 31 liquidity that is consistent with the effective execution of
 47 32 the liquidation.
 47 33    c.  A submission to the court for distribution of assets in
 47 34 accordance with subsection 11 fulfills the requirements of
 47 35 paragraph "a".
 48  1    7.  FRAUDULENT TRANSFERS PRIOR TO PETITION.
 48  2    a.  A transfer made and an obligation incurred by a
 48  3 cemetery within one year prior to the filing of a successful
 48  4 petition for liquidation under this chapter is fraudulent as
 48  5 to then existing and future creditors if made or incurred
 48  6 without fair consideration, or with actual intent to hinder,
 48  7 delay, or defraud either existing or future creditors.  A
 48  8 fraudulent transfer made or an obligation incurred by a
 48  9 cemetery ordered to be liquidated under this chapter may be
 48 10 avoided by the receiver, except as to a person who in good
 48 11 faith is a purchaser, lienor, or obligee for a present fair
 48 12 equivalent value.  A purchaser, lienor, or obligee, who in
 48 13 good faith has given a consideration less than fair for such
 48 14 transfer, lien, or obligation, may retain the property, lien,
 48 15 or obligation as security for repayment.  The court, on due
 48 16 notice, may order any such transfer or obligation to be
 48 17 preserved for the benefit of the estate, and in that event,
 48 18 the receiver shall succeed to and may enforce the rights of
 48 19 the purchaser, lienor, or obligee.
 48 20    b.  (1)  A transfer of property other than real property is
 48 21 made when it becomes perfected so that a subsequent lien
 48 22 obtainable by legal or equitable proceedings on a simple
 48 23 contract could not become superior to the rights of the
 48 24 transferee under subsection 9, paragraph "c".
 48 25    (2)  A transfer of real property is made when it becomes
 48 26 perfected so that a subsequent bona fide purchaser from the
 48 27 cemetery could not obtain rights superior to the rights of the
 48 28 transferee.
 48 29    (3)  A transfer which creates an equitable lien is not
 48 30 perfected if there are available means by which a legal lien
 48 31 could be created.
 48 32    (4)  A transfer not perfected prior to the filing of a
 48 33 petition for liquidation is deemed to be made immediately
 48 34 before the filing of the successful petition.
 48 35    (5)  This subsection applies whether or not there are or
 49  1 were creditors who might have obtained a lien or persons who
 49  2 might have become bona fide purchasers.
 49  3    8.  FRAUDULENT TRANSFER AFTER PETITION.
 49  4    a.  After a petition for liquidation has been filed a
 49  5 transfer of real property of the cemetery made to a person
 49  6 acting in good faith is valid against the receiver if made for
 49  7 a present fair equivalent value.  If the transfer was not made
 49  8 for a present fair equivalent value, then the transfer is
 49  9 valid to the extent of the present consideration actually paid
 49 10 for which amount the transferee shall have a lien on the
 49 11 property transferred.  The commencement of a proceeding in
 49 12 liquidation is constructive notice upon the recording of a
 49 13 copy of the petition for or order of liquidation with the
 49 14 recorder of deeds in the county where any real property in
 49 15 question is located.  The exercise by a court of the United
 49 16 States or a state or jurisdiction to authorize a judicial sale
 49 17 of real property of the cemetery within a county in a state
 49 18 shall not be impaired by the pendency of a proceeding unless
 49 19 the copy is recorded in the county prior to the consummation
 49 20 of the judicial sale.
 49 21    b.  After a petition for liquidation has been filed and
 49 22 before either the receiver takes possession of the property of
 49 23 the cemetery or an order of liquidation is granted:
 49 24    (1)  A transfer of the property, other than real property,
 49 25 of the cemetery made to a person acting in good faith is valid
 49 26 against the receiver if made for a present fair equivalent
 49 27 value.  If the transfer was not made for a present fair
 49 28 equivalent value, then the transfer is valid to the extent of
 49 29 the present consideration actually paid for which amount the
 49 30 transferee shall have a lien on the property transferred.
 49 31    (2)  If acting in good faith, a person indebted to the
 49 32 cemetery or holding property of the cemetery may pay the debt
 49 33 or deliver the property, or any part of the property, to the
 49 34 cemetery or upon the cemetery's order as if the petition were
 49 35 not pending.
 50  1    (3)  A person having actual knowledge of the pending
 50  2 liquidation is not acting in good faith.
 50  3    (4)  A person asserting the validity of a transfer under
 50  4 this subsection has the burden of proof.  Except as provided
 50  5 in this subsection, a transfer by or on behalf of the cemetery
 50  6 after the date of the petition for liquidation by any person
 50  7 other than the liquidator is not valid against the liquidator.
 50  8    c.  A person receiving any property from the cemetery or
 50  9 any benefit of the property of the cemetery which is a
 50 10 fraudulent transfer under paragraph "a" is personally liable
 50 11 for the property or benefit and shall account to the
 50 12 liquidator.
 50 13    d.  This chapter does not impair the negotiability of
 50 14 currency or negotiable instruments.
 50 15    9.  VOIDABLE PREFERENCES AND LIENS.
 50 16    a.  (1)  A preference is a transfer of the property of a
 50 17 cemetery to or for the benefit of a creditor for an antecedent
 50 18 debt made or suffered by the cemetery within one year before
 50 19 the filing of a successful petition for liquidation under this
 50 20 chapter, the effect of which transfer may be to enable the
 50 21 creditor to obtain a greater percentage of this debt than
 50 22 another creditor of the same class would receive.  If a
 50 23 liquidation order is entered while the cemetery is already
 50 24 subject to a receivership, then the transfers are preferences
 50 25 if made or suffered within one year before the filing of the
 50 26 successful petition for the receivership, or within two years
 50 27 before the filing of the successful petition for liquidation,
 50 28 whichever time is shorter.
 50 29    (2)  A preference may be avoided by the liquidator if any
 50 30 of the following exist:
 50 31    (a)  The cemetery was insolvent at the time of the
 50 32 transfer.
 50 33    (b)  The transfer was made within four months before the
 50 34 filing of the petition.
 50 35    (c)  At the time the transfer was made, the creditor
 51  1 receiving it or to be benefited by the transfer or the
 51  2 creditor's agent acting with reference to the transfer had
 51  3 reasonable cause to believe that the cemetery was insolvent or
 51  4 was about to become insolvent.
 51  5    (d)  The creditor receiving the transfer was an officer, or
 51  6 an employee, attorney, or other person who was in fact in a
 51  7 position of comparable influence in the cemetery to an officer
 51  8 whether or not the person held the position of an officer,
 51  9 owner, or other person, firm, corporation, association, or
 51 10 aggregation of persons with whom the cemetery did not deal at
 51 11 arm's length.
 51 12    (3)  Where the preference is voidable, the liquidator may
 51 13 recover the property.  If the property has been converted, the
 51 14 liquidator may recover its value from a person who has
 51 15 received or converted the property.  However, if a bona fide
 51 16 purchaser or lienor has given less than fair equivalent value,
 51 17 the purchaser or lienor shall have a lien upon the property to
 51 18 the extent of the consideration actually given.  Where a
 51 19 preference by way of lien or security interest is voidable,
 51 20 the court may on due notice order the lien or security
 51 21 interest to be preserved for the benefit of the estate, in
 51 22 which event the lien or title shall pass to the liquidator.
 51 23    b.  (1)  A transfer of property other than real property is
 51 24 made when it becomes perfected so that a subsequent lien
 51 25 obtainable by legal or equitable proceedings on a simple
 51 26 contract could not become superior to the rights of the
 51 27 transferee.
 51 28    (2)  A transfer of real property is made when it becomes
 51 29 perfected so that a subsequent bona fide purchaser from the
 51 30 cemetery could not obtain rights superior to the rights of the
 51 31 transferee.
 51 32    (3)  A transfer which creates an equitable lien is not
 51 33 perfected if there are available means by which a legal lien
 51 34 could be created.
 51 35    (4)  A transfer not perfected prior to the filing of a
 52  1 petition for liquidation is deemed to be made immediately
 52  2 before the filing of the successful petition.
 52  3    (5)  This subsection applies whether or not there are or
 52  4 were creditors who might have obtained liens or persons who
 52  5 might have become bona fide purchasers.
 52  6    c.  (1)  A lien obtainable by legal or equitable
 52  7 proceedings upon a simple contract is one arising in the
 52  8 ordinary course of the proceedings upon the entry or docketing
 52  9 of a judgment or decree, or upon attachment, garnishment,
 52 10 execution, or like process, whether before, upon, or after
 52 11 judgment or decree and whether before or upon levy.  It does
 52 12 not include liens which under applicable law are given a
 52 13 special priority over other liens which are prior in time.
 52 14    (2)  A lien obtainable by legal or equitable proceedings
 52 15 could become superior to the rights of a transferee, or a
 52 16 purchaser could obtain rights superior to the rights of a
 52 17 transferee within the meaning of paragraph "b", if such
 52 18 consequences would follow only from the lien or purchase
 52 19 itself, or from the lien or purchase followed by a step wholly
 52 20 within the control of the respective lienholder or purchaser,
 52 21 with or without the aid of ministerial action by public
 52 22 officials.  However, a lien could not become superior and a
 52 23 purchase could not create superior rights for the purpose of
 52 24 paragraph "b" through an act subsequent to the obtaining of a
 52 25 lien or subsequent to a purchase which requires the agreement
 52 26 or concurrence of any third party or which requires further
 52 27 judicial action or ruling.
 52 28    d.  A transfer of property for or on account of a new and
 52 29 contemporaneous consideration, which is under paragraph "b"
 52 30 made or suffered after the transfer because of delay in
 52 31 perfecting it, does not become a transfer for or on account of
 52 32 an antecedent debt if any acts required by the applicable law
 52 33 to be performed in order to perfect the transfer as against
 52 34 liens or a bona fide purchaser's rights are performed within
 52 35 twenty-one days or any period expressly allowed by the law,
 53  1 whichever is less.  A transfer to secure a future loan, if a
 53  2 loan is actually made, or a transfer which becomes security
 53  3 for a future loan, shall have the same effect as a transfer
 53  4 for or on account of a new and contemporaneous consideration.
 53  5    e.  If a lien voidable under paragraph "a", subparagraph
 53  6 (2) has been dissolved by the furnishing of a bond or other
 53  7 obligation, the surety on which has been indemnified directly
 53  8 or indirectly by the transfer or the creation of a lien upon
 53  9 property of a cemetery before the filing of a petition under
 53 10 this chapter which results in a liquidation order, the
 53 11 indemnifying transfer or lien is also voidable.
 53 12    f.  The property affected by a lien voidable under
 53 13 paragraphs "a" and "e" is discharged from the lien.  The
 53 14 property and any of the indemnifying property transferred to
 53 15 or for the benefit of a surety shall pass to the liquidator.
 53 16 However, the court may on due notice order a lien to be
 53 17 preserved for the benefit of the estate and the court may
 53 18 direct that the conveyance be executed to evidence the title
 53 19 of the liquidator.
 53 20    g.  The court shall have summary jurisdiction of a
 53 21 proceeding by the liquidator to hear and determine the rights
 53 22 of the parties under this section.  Reasonable notice of
 53 23 hearing in the proceeding shall be given to all parties in
 53 24 interest, including the obligee of a releasing bond or other
 53 25 like obligation.  Where an order is entered for the recovery
 53 26 of indemnifying property in kind or for the avoidance of an
 53 27 indemnifying lien, upon application of any party in interest,
 53 28 the court shall in the same proceeding ascertain the value of
 53 29 the property or lien.  If the value is less than the amount
 53 30 for which the property is indemnified or less than the amount
 53 31 of the lien, the transferee or lienholder may elect to retain
 53 32 the property or lien upon payment of its value, as ascertained
 53 33 by the court, to the liquidator within the time as fixed by
 53 34 the court.
 53 35    h.  The liability of a surety under a releasing bond or
 54  1 other like obligation is discharged to the extent of the value
 54  2 of the indemnifying property recovered or the indemnifying
 54  3 lien nullified and avoided by the liquidator.  Where the
 54  4 property is retained under paragraph "g", the liability of the
 54  5 surety is discharged to the extent of the amount paid to the
 54  6 liquidator.
 54  7    i.  If a creditor has been preferred for property which
 54  8 becomes a part of the cemetery's estate, and afterward in good
 54  9 faith gives the cemetery further credit without security of
 54 10 any kind, the amount of the new credit remaining unpaid at the
 54 11 time of the petition may be set off against the preference
 54 12 which would otherwise be recoverable from the creditor.
 54 13    j.  If within four months before the filing of a successful
 54 14 petition for liquidation under this chapter, or at any time in
 54 15 contemplation of a proceeding to liquidate, a cemetery,
 54 16 directly or indirectly, pays money or transfers property to an
 54 17 attorney for services rendered or to be rendered, the
 54 18 transaction may be examined by the court on its own motion or
 54 19 shall be examined by the court on petition of the liquidator.
 54 20 The payment or transfer shall be held valid only to the extent
 54 21 of a reasonable amount to be determined by the court.  The
 54 22 excess may be recovered by the liquidator for the benefit of
 54 23 the estate.  However, where the attorney is in a position of
 54 24 influence in the cemetery or an affiliate, payment of any
 54 25 money or the transfer of any property to the attorney for
 54 26 services rendered or to be rendered is governed by the
 54 27 provision of paragraph "a", subparagraph (2), subparagraph
 54 28 subdivision (d).
 54 29    k.  (1)  An officer, manager, employee, shareholder,
 54 30 subscriber, attorney, or any other person acting on behalf of
 54 31 the cemetery who knowingly participates in giving any
 54 32 preference when the person has reasonable cause to believe the
 54 33 cemetery is or is about to become insolvent at the time of the
 54 34 preference is personally liable to the liquidator for the
 54 35 amount of the preference.  There is an inference that
 55  1 reasonable cause exists if the transfer was made within four
 55  2 months before the date of filing of this successful petition
 55  3 for liquidation.
 55  4    (2)  A person receiving property from the cemetery or the
 55  5 benefit of the property of the cemetery as a preference
 55  6 voidable under paragraph "a" is personally liable for the
 55  7 property and shall account to the liquidator.
 55  8    (3)  This subsection shall not prejudice any other claim by
 55  9 the liquidator against any person.
 55 10    10.  CLAIMS OF HOLDER OF VOID OR VOIDABLE RIGHTS.
 55 11    a.  A claim of a creditor who has received or acquired a
 55 12 preference, lien, conveyance, transfer, assignment, or
 55 13 encumbrance, voidable under this chapter shall not be allowed
 55 14 unless the creditor surrenders the preference, lien,
 55 15 conveyance, transfer, assignment, or encumbrance.  If the
 55 16 avoidance is effected by a proceeding in which a final
 55 17 judgment has been entered, the claim shall not be allowed
 55 18 unless the money is paid or the property is delivered to the
 55 19 liquidator within thirty days from the date of the entering of
 55 20 the final judgment.  However, the court having jurisdiction
 55 21 over the liquidation may allow further time if there is an
 55 22 appeal or other continuation of the proceeding.
 55 23    b.  A claim allowable under paragraph "a" by reason of a
 55 24 voluntary or involuntary avoidance, preference, lien,
 55 25 conveyance, transfer, assignment, or encumbrance may be filed
 55 26 as an excused late filing under subsection 12, if filed within
 55 27 thirty days from the date of the avoidance or within the
 55 28 further time allowed by the court under paragraph "a".
 55 29    11.  LIQUIDATOR'S PROPOSAL TO DISTRIBUTE ASSETS.
 55 30    a.  From time to time as assets become available, the
 55 31 liquidator shall make application to the court for approval of
 55 32 a proposal to disburse assets out of marshaled assets.
 55 33    b.  The proposal shall at least include provisions for all
 55 34 of the following:
 55 35    (1)  Reserving amounts for the payment of all the
 56  1 following:
 56  2    (a)  Expenses of administration.
 56  3    (b)  To the extent of the value of the security held, the
 56  4 payment of claims of secured creditors.
 56  5    (c)  Claims falling within the priorities established in
 56  6 subsection 18, paragraphs "a" and "b".
 56  7    (2)  Disbursement of the assets marshaled to date and
 56  8 subsequent disbursement of assets as they become available.
 56  9    c.  Action on the application may be taken by the court
 56 10 provided that the liquidator's proposal complies with
 56 11 paragraph "b".
 56 12    12.  FILING OF CLAIMS.
 56 13    a.  Proof of all claims shall be filed with the liquidator
 56 14 in the form required by subsection 13 on or before the last
 56 15 day for filing specified in the notice required under
 56 16 subsection 4.
 56 17    b.  The liquidator may permit a claimant making a late
 56 18 filing to share in distributions, whether past or future, as
 56 19 if the claimant were not late, to the extent that the payment
 56 20 will not prejudice the orderly administration of the
 56 21 liquidation under any of the following circumstances:
 56 22    (1)  The existence of the claim was not known to the
 56 23 claimant and that the claimant filed the claim as promptly as
 56 24 reasonably possible after learning of it.
 56 25    (2)  A transfer to a creditor was avoided under subsections
 56 26 7 through 9, or was voluntarily surrendered under subsection
 56 27 10, and that the filing satisfies the conditions of subsection
 56 28 10.
 56 29    (3)  The valuation under subsection 17 of security held by
 56 30 a secured creditor shows a deficiency, which is filed within
 56 31 thirty days after the valuation.
 56 32    c.  The liquidator may consider any claim filed late and
 56 33 permit the claimant to receive distributions which are
 56 34 subsequently declared on any claims of the same or lower
 56 35 priority if the payment does not prejudice the orderly
 57  1 administration of the liquidation.  The late-filing claimant
 57  2 shall receive at each distribution the same percentage of the
 57  3 amount allowed on the claim as is then being paid to claimants
 57  4 of any lower priority.  This shall continue until the claim
 57  5 has been paid in full.
 57  6    13.  PROOF OF CLAIM.
 57  7    a.  Proof of claim shall consist of a statement signed by
 57  8 the claimant that includes all of the following that are
 57  9 applicable:
 57 10    (1)  The particulars of the claim including the
 57 11 consideration given for it.
 57 12    (2)  The identity and amount of the security on the claim.
 57 13    (3)  The payments, if any, made on the debt.
 57 14    (4)  A statement that the sum claimed is justly owing and
 57 15 that there is no setoff, counterclaim, or defense to the
 57 16 claim.
 57 17    (5)  Any right of priority of payment or other specific
 57 18 right asserted by the claimant.
 57 19    (6)  A copy of the written instrument which is the
 57 20 foundation of the claim.
 57 21    (7)  The name and address of the claimant and the attorney
 57 22 who represents the claimant, if any.
 57 23    b.  A claim need not be considered or allowed if it does
 57 24 not contain all the information identified in paragraph "a"
 57 25 which is applicable.  The liquidator may require that a
 57 26 prescribed form be used and may require that other information
 57 27 and documents be included.
 57 28    c.  At any time the liquidator may request the claimant to
 57 29 present information or evidence supplementary to that required
 57 30 under paragraph "a" and may take testimony under oath, require
 57 31 production of affidavits or depositions, or otherwise obtain
 57 32 additional information or evidence.
 57 33    d.  A judgment or order against a cemetery entered after
 57 34 the date of filing of a successful petition for liquidation,
 57 35 or a judgment or order against the cemetery entered at any
 58  1 time by default or by collusion need not be considered as
 58  2 evidence of liability or of the amount of damages.  A judgment
 58  3 or order against a cemetery before the filing of the petition
 58  4 need not be considered as evidence of liability or of the
 58  5 amount of damages.
 58  6    14.  SPECIAL CLAIMS.
 58  7    a.  A claim may be allowed even if contingent, if it is
 58  8 filed pursuant to subsection 12.  The claim may be allowed and
 58  9 the claimant may participate in all distributions declared
 58 10 after it is filed to the extent that it does not prejudice the
 58 11 orderly administration of the liquidation.
 58 12    b.  Claims that are due except for the passage of time
 58 13 shall be treated as absolute claims are treated.  However, the
 58 14 claims may be discounted at the legal rate of interest.
 58 15    c.  Claims made under employment contracts by directors,
 58 16 principal officers, or persons in fact performing similar
 58 17 functions or having similar powers are limited to payment for
 58 18 services rendered prior to the issuance of an order of
 58 19 liquidation under subsection 2.
 58 20    15.  DISPUTED CLAIMS.
 58 21    a.  If a claim is denied in whole or in part by the
 58 22 liquidator, written notice of the determination shall be given
 58 23 to the claimant or the claimant's attorney by first class mail
 58 24 at the address shown in the proof of claim.  Within sixty days
 58 25 from the mailing of the notice, the claimant may file
 58 26 objections with the liquidator.  Unless a filing is made, the
 58 27 claimant shall not further object to the determination.
 58 28    b.  If objections are filed with the liquidator and the
 58 29 liquidator does not alter the denial of the claim as a result
 58 30 of the objections, the liquidator shall ask the court for a
 58 31 hearing as soon as practicable and give notice of the hearing
 58 32 by first class mail to the claimant or the claimant's attorney
 58 33 and to any other persons directly affected.  The notice shall
 58 34 be given not less than ten nor more than thirty days before
 58 35 the date of the hearing.  The matter shall be heard by the
 59  1 court or by a court-appointed referee.  The referee shall
 59  2 submit findings of fact along with a recommendation.
 59  3    16.  CLAIMS OF OTHER PERSON.  If a creditor, whose claim
 59  4 against a cemetery is secured in whole or in part by the
 59  5 undertaking of another person, fails to prove and file that
 59  6 claim, then the other person may do so in the creditor's name
 59  7 and shall be subrogated to the rights of the creditor, whether
 59  8 the claim has been filed by the creditor or by the other
 59  9 person in the creditor's name to the extent that the other
 59 10 person discharges the undertaking.  However, in the absence of
 59 11 an agreement with the creditor to the contrary, the other
 59 12 person is not entitled to any distribution until the amount
 59 13 paid to the creditor on the undertaking plus the distributions
 59 14 paid on the claim from the cemetery's estate to the creditor
 59 15 equal the amount of the entire claim of the creditor.  An
 59 16 excess received by the creditor shall be held by the creditor
 59 17 in trust for the other person.
 59 18    17.  SECURED CREDITOR'S CLAIMS.
 59 19    a.  The value of security held by a secured creditor shall
 59 20 be determined in one of the following ways, as the court may
 59 21 direct:
 59 22    (1)  By converting the security into money according to the
 59 23 terms of the agreement pursuant to which the security was
 59 24 delivered to the creditors.
 59 25    (2)  By agreement, arbitration, compromise, or litigation
 59 26 between the creditor and the liquidator.
 59 27    b.  The determination shall be under the supervision and
 59 28 control of the court with due regard for the recommendation of
 59 29 the liquidator.  The amount determined shall be credited upon
 59 30 the secured claim.  A deficiency shall be treated as an
 59 31 unsecured claim.  If the claimant surrenders the security to
 59 32 the liquidator, the entire claim shall be allowed as if
 59 33 unsecured.
 59 34    18.  PRIORITY OF DISTRIBUTION.
 59 35    The priority of distribution of claims from the cemetery's
 60  1 estate shall be in accordance with the order in which each
 60  2 class of claims is set forth.  Claims in each class shall be
 60  3 paid in full or adequate funds retained for the payment before
 60  4 the members of the next class receive any payment.  Subclasses
 60  5 shall not be established within a class.  The order of
 60  6 distribution of claims is as follows:
 60  7    a.  CLASS 1.  The costs and expenses of administration,
 60  8 including but not limited to the following:
 60  9    (1)  The actual and necessary costs of preserving or
 60 10 recovering the assets of the cemetery.
 60 11    (2)  Compensation for all authorized services rendered in
 60 12 the liquidation.
 60 13    (3)  Necessary filing fees.
 60 14    (4)  The fees and mileage payable to witnesses.
 60 15    (5)  Authorized reasonable attorney's fees and other
 60 16 professional services rendered in the liquidation.
 60 17    b.  CLASS 2.  Reasonable compensation to employees for
 60 18 services performed to the extent that they do not exceed two
 60 19 months of monetary compensation and represent payment for
 60 20 services performed within one year before the filing of the
 60 21 petition for liquidation.  Officers and directors are not
 60 22 entitled to the benefit of this priority.  The priority is in
 60 23 lieu of other similar priority which may be authorized by law
 60 24 as to wages or compensation of employees.
 60 25    c.  CLASS 3.  Claims under interment rights contracts.
 60 26    d.  CLASS 4.  Claims of general creditors.
 60 27    e.  CLASS 5.  Claims of the federal or any state or local
 60 28 government.  Claims, including those of a governmental body
 60 29 for a penalty or forfeiture, are allowed in this class only to
 60 30 the extent of the pecuniary loss sustained from the act,
 60 31 transaction, or proceeding out of which the penalty or
 60 32 forfeiture arose, with reasonable and actual costs incurred.
 60 33 The remainder of such claims shall be postponed to the class
 60 34 of claims under paragraph "g".
 60 35    f.  CLASS 6.  Claims filed late or any other claims other
 61  1 than claims under paragraph "g".
 61  2    g.  CLASS 7.  The claims of shareholders or other owners.
 61  3    19.  LIQUIDATOR'S RECOMMENDATIONS TO THE COURT.
 61  4    a.  The liquidator shall review claims duly filed in the
 61  5 liquidation and shall make further investigation as necessary.
 61  6 The liquidator may compound, compromise or in any other manner
 61  7 negotiate the amount for which claims will be recommended to
 61  8 the court except where the liquidator is required by law to
 61  9 accept claims as settled by a person or organization.
 61 10 Unresolved disputes shall be determined under subsection 15.
 61 11 As soon as practicable, the liquidator shall present to the
 61 12 court a report of the claims against the cemetery with the
 61 13 liquidator's recommendations.  The report shall include the
 61 14 name and address of each claimant and the amount of the claim
 61 15 finally recommended.
 61 16    b.  The court may approve, disapprove, or modify the report
 61 17 on claims by the liquidator.  Reports not modified by the
 61 18 court within sixty days following submission by the liquidator
 61 19 shall be treated by the liquidator as allowed claims, subject
 61 20 to later modification or to rulings made by the court pursuant
 61 21 to subsection 15.  A claim under a policy of insurance shall
 61 22 not be allowed for an amount in excess of the applicable
 61 23 policy limits.
 61 24    20.  DISTRIBUTION OF ASSETS.  Under the direction of the
 61 25 court, the liquidator shall pay distributions in a manner that
 61 26 will assure the proper recognition of priorities and a
 61 27 reasonable balance between the expeditious completion of the
 61 28 liquidation and the protection of unliquidated and
 61 29 undetermined claims, including third-party claims.
 61 30 Distribution of assets in kind may be made at valuations set
 61 31 by agreement between the liquidator and the creditor and
 61 32 approved by the court.
 61 33    21.  UNCLAIMED AND WITHHELD FUNDS.
 61 34    a.  Unclaimed funds subject to distribution remaining in
 61 35 the liquidator's hands when the liquidator is ready to apply
 62  1 to the court for discharge, including the amount distributable
 62  2 to a creditor, owner, or other person who is unknown or cannot
 62  3 be found, shall be deposited with the treasurer of state, and
 62  4 shall be paid without interest, except as provided in
 62  5 subsection 18, to the person entitled or the person's legal
 62  6 representative upon proof satisfactory to the treasurer of
 62  7 state of the right to the funds.  An amount on deposit not
 62  8 claimed within six years from the discharge of the liquidator
 62  9 is deemed to have been abandoned and shall become the property
 62 10 of the state without formal escheat proceedings and be
 62 11 transferred to the insurance division regulatory fund.
 62 12    b.  Funds withheld under subsection 14 and not distributed
 62 13 shall upon discharge of the liquidator be deposited with the
 62 14 treasurer of state and paid pursuant to subsection 18.  Sums
 62 15 remaining which under subsection 18 would revert to the
 62 16 undistributed assets of the cemetery shall be transferred to
 62 17 the insurance division regulatory fund and become the property
 62 18 of the state as provided under paragraph "a", unless the
 62 19 commissioner in the commissioner's discretion petitions the
 62 20 court to reopen the liquidation pursuant to subsection 23.
 62 21    c.  Notwithstanding any other provision of this chapter,
 62 22 funds as identified in paragraph "a", with the approval of the
 62 23 court, shall be made available to the commissioner for use in
 62 24 the detection and prevention of future insolvencies.  The
 62 25 commissioner shall hold these funds in the insurance division
 62 26 regulatory fund and shall pay without interest, except as
 62 27 provided in subsection 18, to the person entitled to the funds
 62 28 or the person's legal representative upon proof satisfactory
 62 29 to the commissioner of the person's right to the funds.  The
 62 30 funds shall be held by the commissioner for a period of two
 62 31 years at which time the rights and duties to the unclaimed
 62 32 funds shall vest in the commissioner.
 62 33    22.  TERMINATION OF PROCEEDINGS.
 62 34    a.  When all assets justifying the expense of collection
 62 35 and distribution have been collected and distributed under
 63  1 this chapter, the liquidator shall apply to the court for
 63  2 discharge.  The court may grant the discharge and make any
 63  3 other orders, including an order to transfer remaining funds
 63  4 that are uneconomical to distribute, as appropriate.
 63  5    b.  Any other person may apply to the court at any time for
 63  6 an order under paragraph "a".  If the application is denied,
 63  7 the applicant shall pay the costs and expenses of the
 63  8 liquidator in resisting the application, including a
 63  9 reasonable attorney's fee.
 63 10    23.  REOPENING LIQUIDATION.  At any time after the
 63 11 liquidation proceeding has been terminated and the liquidator
 63 12 discharged, the commissioner or other interested party may
 63 13 petition the court to reopen the proceedings for good cause
 63 14 including the discovery of additional assets.  The court shall
 63 15 order the proceeding reopened if it is satisfied that there is
 63 16 justification for the reopening.
 63 17    24.  DISPOSITION OF RECORDS DURING AND AFTER TERMINATION OF
 63 18 LIQUIDATION.  If it appears to the commissioner that the
 63 19 records of a cemetery in process of liquidation or completely
 63 20 liquidated are no longer useful, the commissioner may
 63 21 recommend to the court and the court shall direct what records
 63 22 shall be retained for future reference and what records shall
 63 23 be destroyed.
 63 24    25.  EXTERNAL AUDIT OF RECEIVER'S BOOKS.  The court may
 63 25 order audits to be made of the books of the commissioner
 63 26 relating to a receivership established under this chapter, and
 63 27 a report of each audit shall be filed with the commissioner
 63 28 and with the court.  The books, records, and other documents
 63 29 of the receivership shall be made available to the auditor at
 63 30 any time without notice.  The expense of an audit shall be
 63 31 considered a cost of administration of the receivership.
 63 32    Sec. 27.  NEW SECTION.  523J.6  POWERS AND DUTIES OF
 63 33 PERPETUAL CARE CEMETERIES.
 63 34    1.  Within the boundaries of the cemetery lands that the
 63 35 cemetery owns, a cemetery may perform the following functions:
 64  1    a.  The exclusive care and maintenance of the cemetery.
 64  2    b.  The exclusive interment, entombment, or inurnment of
 64  3 human remains, including the exclusive right to open, prepare
 64  4 for interment, and close all ground, mausoleum, and urn
 64  5 burials.  Each preneed contract for burial rights or services
 64  6 shall disclose, pursuant to the cemetery's bylaws, rules, and
 64  7 regulations, whether opening and closing of the burial space
 64  8 is included in the contract, and, if not, the current prices
 64  9 for opening and closing and a statement that these prices are
 64 10 subject to change.  Each cemetery which sells preneed
 64 11 contracts must offer opening and closing as part of a preneed
 64 12 contract.
 64 13    c.  The exclusive initial preneed and at-need sale of
 64 14 interment or burial rights in earth, mausoleum, crypt, niche,
 64 15 or columbarium interment.  However, this chapter does not
 64 16 limit the right of a person owning interment or burial rights
 64 17 to sell those rights to third parties subject to transfer of
 64 18 title by the cemetery.
 64 19    d.  The adoption of bylaws regulating the activities
 64 20 conducted within the cemetery's boundaries, provided that a
 64 21 licensed funeral director shall not be denied access by any
 64 22 cemetery to conduct a funeral for or supervise a disinterment
 64 23 of human remains.  The cemetery shall not approve any bylaw
 64 24 which unreasonably restricts competition, or which
 64 25 unreasonably increases the cost to the owner of interment or
 64 26 burial rights in utilizing these rights.
 64 27    e.  The nonexclusive preneed and at-need sale of monuments,
 64 28 memorials, markers, burial vaults, urns, flower vases, floral
 64 29 arrangements, and other similar merchandise for use within the
 64 30 cemetery.
 64 31    f.  The entry into sales or management contracts with other
 64 32 persons.  The cemetery shall be responsible for the deposit of
 64 33 all moneys required to be placed in a trust fund.
 64 34    2.  A full disclosure shall be made of all fees required
 64 35 for interment, entombment, or inurnment of human remains.
 65  1    3.  A cemetery may adopt bylaws establishing minimum
 65  2 standards for burial merchandise or the installation of such
 65  3 merchandise.
 65  4    Sec. 28.  NEW SECTION.  523J.7  INVESTIGATIONS.
 65  5    The commissioner or the attorney general, for the purpose
 65  6 of discovering violations of this chapter, may do any of the
 65  7 following:
 65  8    1.  Investigate the cemetery and examine records as
 65  9 necessary to verify compliance with this chapter.
 65 10    2.  Administer oaths and affirmations, subpoena witnesses,
 65 11 receive evidence, and require the production of documents and
 65 12 records in connection with an investigation or proceeding
 65 13 being conducted pursuant to this chapter.
 65 14    3.  Apply to the district court for issuance of an order
 65 15 requiring a person's appearance before the commissioner or
 65 16 attorney general, or a designee of either or both, in cases
 65 17 where the person has refused to obey a subpoena issued by the
 65 18 commissioner or attorney general.  The person may also be
 65 19 required to produce documentary evidence germane to the
 65 20 subject of the investigation.  Failure to obey a court order
 65 21 under this subsection constitutes contempt of court.
 65 22    Sec. 29.  Section 566A.1, subsection 1, Code 1995, is
 65 23 amended to read as follows:
 65 24    1.  A corporation or other form of organization engaging in
 65 25 the business of the ownership, maintenance, or operation of a
 65 26 cemetery, which provides lots or other interment space for the
 65 27 remains of human bodies is subject to this chapter.  However,
 65 28 a church, religious organization, or established fraternal
 65 29 society cemetery is subject only to subsection 2 of this
 65 30 section, and sections 566A.2A and 566A.2B.  A cemetery with
 65 31 average retail sales equal to or less than five thousand
 65 32 dollars for the previous three calendar years is exempt from
 65 33 section 566A.2D.  Political subdivisions of the state which
 65 34 are counties are exempt from this chapter.  Political
 65 35 subdivisions of the state other than counties are subject only
 66  1 to sections 566A.1A, 566A.2A, 566A.2B, and 566A.2E.
 66  2    Sec. 30.  NEW SECTION.  566A.1A  DEFINITIONS.
 66  3    As used in this chapter, unless the context otherwise
 66  4 requires:
 66  5    1.  "Agent" means a person authorized by a cemetery or a
 66  6 cemetery operator to represent the cemetery in dealing with
 66  7 the public.
 66  8    2.  "Cemetery" means a cemetery, mausoleum, columbarium, or
 66  9 other space held for the purpose of burial, entombment, or
 66 10 inurnment of human remains and where such space is offered for
 66 11 sale to the public.
 66 12    3.  "Cemetery operator" means a person who owns, controls,
 66 13 operates, or manages a cemetery, who is responsible for the
 66 14 cemetery's care and maintenance, and who controls the opening
 66 15 and closing of all graves, crypts, and niches.
 66 16    4.  "Columbarium" means a structure or room or other space
 66 17 in a building or structure used or intended to be used for the
 66 18 inurnment or deposit of cremated human remains.
 66 19    5.  "Commissioner" means the commissioner of insurance or
 66 20 the deputy appointed under section 502.601.
 66 21    6.  "Deed" means the assignment or conveyance of interment
 66 22 rights.
 66 23    7.  "Grave" means a piece of land that is used or intended
 66 24 to be used for the underground burial of human remains, other
 66 25 than an underground mausoleum or columbarium space.
 66 26    8.  "Human remains" means the body of a deceased individual
 66 27 that is in any stage of decomposition or has been cremated.
 66 28    9.  "Interment" means the disposition of human remains by
 66 29 earth burial, entombment, or inurnment.
 66 30    10.  "Interment rights" means a right of use conveyed by
 66 31 contract or property ownership to inter human remains in a
 66 32 columbarium, grave, mausoleum, lawn crypt, or undeveloped
 66 33 space.
 66 34    11.  "Lawn crypt" means an outer enclosure, for a casket or
 66 35 similar inner burial container which is permanently installed
 67  1 below ground prior to the time of actual interment.  A lawn
 67  2 crypt may permit single or multiple interments in a grave
 67  3 space.
 67  4    12.  "Mausoleum" means a building, structure, or part of a
 67  5 building or structure that is used or intended to be used for
 67  6 the entombment of human remains.
 67  7    13.  "Mausoleum space" means a niche, crypt, or specific
 67  8 place in a mausoleum that contains or is intended to contain
 67  9 human remains.
 67 10    14.  "Niche" means a recess in the wall of a mausoleum or
 67 11 columbarium for the deposit of human remains.
 67 12    15.  "Perpetual care" means maintenance, repair, and care
 67 13 of all interment spaces, features, buildings, roadways,
 67 14 parking lots, water supply, and other existing cemetery
 67 15 structures subject to the provisions of section 566A.3 and
 67 16 includes the general overhead expenses needed to accomplish
 67 17 such maintenance, repair, and care.
 67 18    16.  "Perpetual care cemetery" means a cemetery which has
 67 19 established a perpetual care fund for the maintenance, repair,
 67 20 and care of all interment spaces subject to perpetual care
 67 21 within the cemetery in compliance with section 566A.3.
 67 22    17.  "Religious cemetery" means a cemetery that is owned,
 67 23 operated, or controlled by a recognized church, religious
 67 24 society, association, or denomination.
 67 25    18.  "Sale" means a transfer for consideration of any
 67 26 interest in ownership, title, or right of use.
 67 27    19.  "Undeveloped space" means a mausoleum, columbarium
 67 28 space, or lawn crypt that is not ready for the burial of human
 67 29 remains on the date of the sale of the space.
 67 30    Sec. 31.  NEW SECTION.  566A.2A  PERPETUAL CARE CEMETERY
 67 31 REGISTRY.
 67 32    A perpetual care cemetery shall maintain a registry of
 67 33 individuals who have purchased items subject to the perpetual
 67 34 care requirements of this chapter including the amount
 67 35 deposited in trust for each individual.  The registry shall
 68  1 include all transactions entered into on or after July 1,
 68  2 1995.
 68  3    Sec. 32.  NEW SECTION.  566A.2B  INTERMENT RIGHTS AGREEMENT
 68  4 &endash; REQUIREMENTS &endash; CONTENTS.
 68  5    1.  An agreement for interment rights under this chapter
 68  6 must be written in clear, understandable language and do all
 68  7 of the following:
 68  8    a.  Identify the seller and purchaser.
 68  9    b.  Identify the salesperson.
 68 10    c.  Specify the interment rights to be provided and the
 68 11 cost of each item.
 68 12    d.  State clearly the conditions on which substitution will
 68 13 be allowed.
 68 14    e.  Set forth the total purchase price and the terms under
 68 15 which it is to be paid.
 68 16    f.  State clearly whether the agreement is a revocable or
 68 17 irrevocable contract, and, if revocable, which parties have
 68 18 the authority to revoke the agreement.
 68 19    g.  State the amount or percentage of money to be placed in
 68 20 the cemetery's perpetual care and maintenance guarantee fund.
 68 21    h.  Set forth an explanation that the perpetual care and
 68 22 maintenance guarantee fund is an irrevocable trust, that
 68 23 deposits cannot be withdrawn even in the event of
 68 24 cancellation, and that the trust's income shall be used by the
 68 25 cemetery for its maintenance, repair, and care.
 68 26    i.  Set forth an explanation of any fees or expenses that
 68 27 may be charged.
 68 28    j.  Set forth an explanation of whether amounts for
 68 29 perpetual care will be deposited in trust upon payment in full
 68 30 or on an allocable basis as payments are made.
 68 31    k.  Set forth an explanation of whether initial payments on
 68 32 agreements for multiple items of funeral and cemetery
 68 33 merchandise or services, or both, will be allocated first to
 68 34 the purchase of a grave, niche, columbarium space, or
 68 35 mausoleum space.  If such an allocation is to be made, the
 69  1 agreement shall provide for the immediate transfer of such
 69  2 interment rights upon payment in full and prominently state
 69  3 that any applicable trust deposits under chapters 523A and
 69  4 523E will not be made until the cemetery has received payment
 69  5 in full for the interment rights.  The transfer of an
 69  6 undeveloped space may be deferred until such space is ready
 69  7 for burial.
 69  8    l.  If the transfer of an undeveloped space will be
 69  9 deferred until the space is ready for burial as permitted in
 69 10 paragraph "l", the agreement shall provide for some form of
 69 11 written acknowledgment upon payment in full, specify a
 69 12 reasonable time period for development of the space, describe
 69 13 what happens in the event of a death prior to development of
 69 14 the space, and provide for the immediate transfer of the
 69 15 interment rights when development of the space is complete.
 69 16    m.  Specify the purchaser's right to cancel and the damages
 69 17 payable for cancellation, if any.
 69 18    n.  State the name and address of the commissioner.
 69 19    Sec. 33.  NEW SECTION.  566A.2D  ANNUAL REPORT BY
 69 20 NONPERPETUAL CARE CEMETERIES.
 69 21    1.  A nonperpetual care cemetery shall file a written
 69 22 report with the insurance division within four months
 69 23 following the end of the cemetery's fiscal year.  The report
 69 24 shall include all of the following:
 69 25    a.  The name and address of the cemetery.
 69 26    b.  An affidavit that the cemetery is a nonperpetual care
 69 27 cemetery in compliance with section 566A.5.
 69 28    c.  Copies of all sales agreement forms used by the
 69 29 cemetery.
 69 30    2.  The commissioner shall permit the filing of a unified
 69 31 annual report in the event of commonly owned or affiliated
 69 32 cemeteries.  A political subdivision subject to this section
 69 33 may commingle perpetual care funds for purposes of investment
 69 34 and administration and may file a single report, if each
 69 35 cemetery is appropriately identified and separate records are
 70  1 maintained for each cemetery.
 70  2    3.  The report shall be made under oath.
 70  3    4.  Notwithstanding chapter 22, all records maintained by
 70  4 the commissioner under this section are confidential and shall
 70  5 not be made available for inspection or copying except upon
 70  6 the approval of the commissioner or attorney general.
 70  7    Sec. 34.  NEW SECTION.  566A.2E  ANNUAL REPORT BY PERPETUAL
 70  8 CARE CEMETERIES.
 70  9    1.  A perpetual care cemetery shall file a written report
 70 10 as of the end of each fiscal year of the cemetery including
 70 11 the following:
 70 12    a.  The name and address of the cemetery.
 70 13    b.  The name and address of any trustee holding perpetual
 70 14 care and maintenance guarantee fund moneys.
 70 15    c.  The name and address of any depository holding
 70 16 perpetual care and maintenance guarantee fund moneys.
 70 17    d.  An affidavit that the cemetery is a perpetual care
 70 18 cemetery in compliance with section 566A.3.
 70 19    e.  Copies of all sales agreement forms used by the
 70 20 cemetery.
 70 21    f.  The amount of the principal of the cemetery's perpetual
 70 22 care funds at the end of the fiscal year.
 70 23    g.  The number of interments made and the number of deeds
 70 24 issued during the cemetery's preceding fiscal year.
 70 25    2.  The report shall be filed with the insurance division
 70 26 within four months following the end of the cemetery's fiscal
 70 27 year in the form required by the commissioner.
 70 28    3.  The commissioner shall permit the filing of a unified
 70 29 annual report in the event of commonly owned or affiliated
 70 30 cemeteries.  A political subdivision subject to this section
 70 31 may commingle perpetual care funds for purposes of investment
 70 32 and administration and may file a single report, if each
 70 33 cemetery is appropriately identified and separate records are
 70 34 maintained for each cemetery.
 70 35    4.  The commissioner shall establish by rule an audit fee
 71  1 to be filed with the annual report.  The audit report fee
 71  2 shall be based on the number of deeds issued by the cemetery
 71  3 during the reporting period.  The audit fee shall apply only
 71  4 to perpetual care cemeteries and shall be based on the
 71  5 approximate cost of regulation.
 71  6    5.  Notwithstanding chapter 22, all records maintained by
 71  7 the commissioner under this subsection are confidential and
 71  8 shall not be made available for inspection or copying except
 71  9 upon approval of the commissioner or attorney general.
 71 10    Sec. 35.  Section 566A.3, Code 1995, is amended by adding
 71 11 the following new unnumbered paragraph:
 71 12    NEW UNNUMBERED PARAGRAPH.  A perpetual care cemetery may
 71 13 require a contribution to the cemetery's perpetual care
 71 14 guarantee fund for each grave marker, tombstone, monument, or
 71 15 item of ornamental merchandise installed in the cemetery from
 71 16 the purchaser of such merchandise.  A cemetery may establish a
 71 17 separate perpetual care fund for this purpose.  The
 71 18 contribution, if required by the cemetery, shall be uniformly
 71 19 charged on every installation and shall be set aside and
 71 20 deposited in the perpetual care trust fund.  The contributions
 71 21 shall be nonrefundable and shall not be withdrawn from the
 71 22 trust fund once deposited.
 71 23    Sec. 36.  Section 566A.5, Code 1995, is amended by striking
 71 24 the section and inserting in lieu thereof the following:
 71 25    566A.5  NONPERPETUAL CARE CEMETERIES.
 71 26    1.  Each nonperpetual care cemetery shall post a legible
 71 27 sign in a conspicuous place in the office or offices where
 71 28 sales are conducted, and at or near the entrance of the
 71 29 cemetery or its administration building and readily accessible
 71 30 to the public stating:  "This is a nonperpetual care
 71 31 cemetery".  The lettering of these signs shall be of a size
 71 32 and style as approved by the commissioner by rule or order so
 71 33 that the signs can be read at a reasonable distance.
 71 34    2.  Each nonperpetual care cemetery shall also have printed
 71 35 or stamped at the head of all of its contracts, deeds,
 72  1 statements, letterheads, and advertising material, the legend:
 72  2 "This is a nonperpetual care cemetery", and shall not sell any
 72  3 lot or interment space in the cemetery unless the purchaser of
 72  4 the lot or interment space is informed that the cemetery is a
 72  5 nonperpetual care cemetery.
 72  6    3.  A nonperpetual care cemetery or cemetery operator or
 72  7 employee or agent of a nonperpetual care cemetery shall not
 72  8 advertise or represent that the cemetery is a perpetual care
 72  9 cemetery or use any similar title, description, or term
 72 10 indicating that the cemetery provides guaranteed or permanent
 72 11 maintenance and care or that the cemetery has a trust fund or
 72 12 endowment fund to pay for the expenses of such care.
 72 13    Sec. 37.  Section 566A.12, Code 1995, is amended by
 72 14 striking the section and inserting in lieu thereof the
 72 15 following:
 72 16    566A.12  ANNUAL REPORTS AND ADMINISTRATION.
 72 17    1.  CEMETERY REGISTRY.  The commissioner shall establish
 72 18 and maintain a public registry of perpetual care cemeteries.
 72 19    2.  INVESTIGATIONS AND AUDITS.  The commissioner or the
 72 20 attorney general, for the purpose of discovering violations of
 72 21 this chapter or rules adopted pursuant to this chapter, may do
 72 22 any of the following:
 72 23    a.  Audit any cemetery, for cause or on a random basis, to
 72 24 determine compliance with this chapter.  A cemetery shall make
 72 25 available to the commissioner or attorney general the
 72 26 cemetery's deed registry and those books, accounts, records,
 72 27 and files related to the sale of interment rights.
 72 28 Notwithstanding chapter 22, all business records and files
 72 29 acquired by the commissioner or attorney general pursuant to
 72 30 an audit under this subsection are confidential and shall not
 72 31 be made available for inspection or copying unless ordered by
 72 32 a court for good cause shown.  If it is determined pursuant to
 72 33 an audit that a material violation of this chapter or rules
 72 34 adopted pursuant to this chapter has occurred, the cost of the
 72 35 audit may be assessed to the cemetery.
 73  1    b.  Administer oaths and affirmations, subpoena witnesses,
 73  2 receive evidence, and require the production of documents and
 73  3 records in connection with an investigation or proceeding
 73  4 being conducted pursuant to this chapter.
 73  5    c.  Apply to the district court for issuance of an order
 73  6 requiring a person's appearance before the commissioner or
 73  7 attorney general, or a designee of either or both, where the
 73  8 person has refused to obey a subpoena issued by the
 73  9 commissioner or attorney general.  The person may also be
 73 10 required to produce documentary evidence germane to the
 73 11 subject of the investigation.  Failure to obey a court order
 73 12 under this subsection constitutes contempt of court.
 73 13    3.  CEASE AND DESIST ORDERS.  If an audit or investigation
 73 14 provides reasonable evidence that a person has violated this
 73 15 chapter, or any rule adopted pursuant to this chapter, the
 73 16 commissioner may issue an order directed at the person to
 73 17 cease and desist from engaging in such act or practice.
 73 18    4.  RECEIVERSHIPS.
 73 19    a.  The commissioner shall notify the attorney general if
 73 20 the commissioner finds that a perpetual care cemetery subject
 73 21 to regulation under this chapter meets one or more of the
 73 22 following grounds for the establishment of a receivership:
 73 23    (1)  Is insolvent.
 73 24    (2)  Has utilized trust funds for personal or business
 73 25 purposes in a manner inconsistent with the requirements of
 73 26 this chapter, and the amount of funds currently held in the
 73 27 trust is less than the amount required by this chapter.
 73 28    b.  The attorney general may apply to the district court in
 73 29 any county of the state for a receivership.  Upon proof of any
 73 30 of the grounds for a receivership described in this section
 73 31 the court may grant a receivership.
 73 32    5.  INJUNCTIONS.  The attorney general may apply to the
 73 33 district court for an injunction to restrain any cemetery
 73 34 subject to this chapter and any agents, employees, trustees,
 73 35 or associates of the cemetery from engaging in conduct or
 74  1 practices deemed a violation of this chapter or rules adopted
 74  2 pursuant to this chapter.  Upon proof of any violation of this
 74  3 chapter described in the petition for injunction, the court
 74  4 may grant the injunction.  Failure to obey a court order under
 74  5 this subsection constitutes contempt of court.
 74  6    Sec. 38.  Section 566A.13, Code 1995, is amended to read as
 74  7 follows:
 74  8    566A.13  VIOLATIONS AND PENALTIES.
 74  9    A violation of this chapter or rules adopted by the
 74 10 attorney general commissioner pursuant to this chapter is a
 74 11 violation of section 714.16, subsection 2, paragraph "a".  The
 74 12 remedies and penalties provided by section 714.16, including
 74 13 but not limited to, provisions relating to injunctive relief
 74 14 and penalties, apply to a violation of this chapter.
 74 15    Sec. 39.  NEW SECTION.  566A.14  RULES.
 74 16    The division of insurance may adopt rules pursuant to
 74 17 chapter 17A as necessary and appropriate to administer this
 74 18 chapter.
 74 19    Sec. 40.  NEW SECTION.  566A.15  CEMETERY FUND.
 74 20    A special revenue fund is created in the state treasury,
 74 21 under the control of the commissioner, to be known as the
 74 22 insurance division cemetery fund.  Commencing July 1, 1995,
 74 23 filing fees received pursuant to section 566A.2D and one
 74 24 dollar from the audit fee for each deed reported on the annual
 74 25 report required by section 566A.2E, executed during the
 74 26 preceding fiscal year, shall be deposited in the insurance
 74 27 division cemetery fund by the commissioner.  However, if the
 74 28 balance of the fund on July 1 of any year exceeds two hundred
 74 29 thousand dollars, the allocation to the fund shall not be
 74 30 made, and the total sum of the fees paid pursuant to section
 74 31 566A.2E shall be deposited in the general fund of the state.
 74 32 Notwithstanding section 8.33, moneys in the fund shall not
 74 33 revert to the general fund but shall remain in the cemetery
 74 34 fund.  Moneys in the cemetery fund are appropriated to the
 74 35 insurance division and, subject to authorization by the
 75  1 commissioner, may be used to pay the expenses of that office
 75  2 incurred in the administration of the audit, investigative,
 75  3 and enforcement duties and obligations imposed under this
 75  4 chapter, and the expenses of receiverships established
 75  5 pursuant to section 566A.12.
 75  6    Sec. 41.  CONDITION TO ENACTMENT OF CERTAIN PROVISIONS.
 75  7 The section of this Act which amends Code section 566A.12
 75  8 shall only be implemented if the general assembly makes an
 75  9 appropriation of at least fifty thousand dollars and provides
 75 10 for the employment of one full-time employee devoted to the
 75 11 insurance division for the implementation of this Act.  
 75 12 HF 486
 75 13 mj/pk/25
     
Text: HF00485                           Text: HF00487
Text: HF00400 - HF00499                 Text: HF Index
Bills and Amendments: General Index     Bill History: General Index
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