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PAG LIN 1 1 Section 1. Section 523A.1, unnumbered paragraph 4, Code 1 2 1995, is amended to read as follows: 1 3 This section does not apply to payments for merchandise de- 1 4 livered to the purchaser.DeliveryExcept for caskets and 1 5 other types of inner burial containers or concrete burial 1 6 vaults sold after July 1, 1995, delivery includes storage in a 1 7 warehouse under the control of the seller or any other 1 8 warehouse or storage facility approved by the commissioner 1 9 when a receipt of ownership in the name of the purchaser is 1 10 delivered to the purchaser, the merchandise is insured against 1 11 loss, the merchandise is protected against damage, title has 1 12 been transferred to the purchaser, the merchandise is 1 13 appropriately identified and described in a manner that it can 1 14 be distinguished from other similar items of merchandise, the 1 15 method of storage allows for visual audits of the merchandise, 1 16 and the annual reporting requirements of section 523A.2, 1 17 subsection 1, are satisfied. 1 18 Sec. 2. Section 523A.2, subsection 1, paragraphs a and c, 1 19 Code 1995, are amended to read as follows: 1 20 a. Until an agreement is funded by insurance, covered by a 1 21 bond in lieu of a trust fund, or an amount is transferred to 1 22 trust pursuant to section 523A.1, payments subject to section 1 23 523A.1 shall not be commingled with other funds of the seller. 1 24 (1) Unless directly deposited in a trust account in a 1 25 manner consistent with this section, one hundred percent of 1 26 the amount received shall be deposited and held in an escrow 1 27 account in a state or federally insured financial institution. 1 28 (2) All funds held in trust under section 523A.1 shall be 1 29 deposited in a state or federally insured bank, savings and 1 30 loan association, or credit union authorized to conduct 1 31 business in this state, or trust departmentthereofof such 1 32 bank, savings and loan association, or credit union, or in a 1 33 trust company authorized to conduct business in this state, 1 34 within fifteen days after the close of the month of receipt of 1 35 the funds and shall be held as provided in paragraph "g" for 2 1 the designated beneficiary until released pursuant to section 2 2 523A.1. 2 3 c. The seller under an agreement referred to in section 2 4 523A.1 shall file with the commissioner not later than March 1 2 5 of each year a report including the following information: 2 6 (1) The name and address of the seller and the name and 2 7 address of the establishment that will provide the funeral 2 8 services or funeral merchandise. 2 9 (2)The name of the purchaser, beneficiary, and the amount2 10of each agreement under section 523A.1 made in the preceding2 11year and the date on which it was made.The balance of each 2 12 trust account as of the end of the preceding calendar year, 2 13 identified by the name of the purchaser or the beneficiary, 2 14 and a report of any amounts withdrawn from trust and the 2 15 reason for each withdrawal. 2 16 (3)The total value of agreements subject to section2 17523A.1 entered into, the total amount paid pursuant to those2 18agreements, and the total amount deposited in trust as2 19required under section 523A.1, during the preceding year.A 2 20 description of insurance funding outstanding at the end of the 2 21 preceding calendar year, identified by the name of the 2 22 purchaser or the beneficiary, and a report of any insurance 2 23 payments received by the seller. 2 24(4) The amount of any payments received pursuant to2 25agreements reported in previous years in accordance with2 26subparagraphs (2) and (3) and the amount of those payments2 27deposited in trust for each purchaser.2 28(5) The change in status of any trust account, including2 29total amount of interest or income withdrawn from each trust2 30account in the preceding year, and for each purchaser, any2 31other amounts withdrawn from trust and the reason for each2 32withdrawal. However, regular increments of interest or income2 33need not be reported on a yearly basis.2 34(6) The name and address of the financial institution in2 35which trust funds were deposited, and the name and address of3 1each insurance company which funds agreements under section3 2523A.1.3 3(7) The name and address of each purchaser of funeral3 4merchandise delivered in lieu of trusting pursuant to section3 5523A.1, and a description of that merchandise for each3 6purchaser.3 7(8)(4)TheA complete inventory of funeral merchandise 3 8and its location in the seller's possession that has been3 9 delivered in lieu of trusting pursuant to section 523A.1.3 10(9) Other information reasonably required by the com-3 11missioner for purposes of administration of this chapter.3 12The information required by subparagraphs (7) and (8) shall3 13include, including the location of the merchandise, serial 3 14 numbers or warehouse receipt numbers, identified by the name 3 15 of the purchaser or the beneficiary, and a verified statement 3 16 of a certified public accountant that the certified public 3 17 accountant has conducted a physical inventory of the funeral 3 18 merchandisespecified in subparagraph (8)and that each item 3 19 of that merchandise is in the seller's possession at the 3 20 specified location. The statement shall be on a form 3 21 prescribed by the commissioner. 3 22 The report shall be accompanied by a filing fee determined 3 23 by the commissioner which shall be sufficient to defray the 3 24 costs of administering this chapter. 3 25 Sec. 3. Section 523A.2, subsection 7, Code 1995, is 3 26 amended to read as follows: 3 27 7. This chapter does not prohibit the funding of an 3 28 agreement otherwise subject to section 523A.1 by insurance 3 29 proceeds derived from a policy issued by an insurance company 3 30 authorized to conduct business in this state. Payments may be 3 31 made directly to the insurance company by the purchaser of the 3 32 agreement, in any amount. If the payments are not made 3 33 directly to the insurance company by the purchaser of the 3 34 agreement, at least eighty percent of the payments received by 3 35 the seller under an agreement otherwise subject to section 4 1 523A.1 shall be used to purchase the insurance until an 4 2 insurance policy has been issued and paid in full for the 4 3 amount of the agreement. Absent the written consent by the 4 4 purchaser of the agreement to the contrary, insurance policies 4 5 funding agreements otherwise subject to section 523A.1 shall 4 6 contain a formula designed to increase the face amount of the 4 7 policy to adjust for inflation in the price of the merchandise 4 8 and services purchased under the agreement. The seller of an 4 9 agreement subject to this chapter which is to be funded by 4 10 insurance proceeds shall obtain all permits required to be 4 11 obtained under this chapter and comply with the reporting 4 12 requirements of this section. 4 13 Sec. 4. Section 523A.8, subsection 1, paragraphs e, h, and 4 14 j, Code 1995, are amended to read as follows: 4 15 e. State clearly whether the agreement is a guaranteed 4 16 price contract or a nonguaranteed price contract. Each 4 17 nonguaranteed price contract shall contain in twelve point 4 18 bold type, an explanation of the consequences in substantially 4 19 the following language: 4 20 THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS AGREEMENT 4 21 ARE SUBJECT TO CHANGE IN THE FUTURE. ANY FUNDS PAID UNDER 4 22 THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED, TOGETHER WITH 4 23 ACCRUED INCOME, TOWARD THE FINAL COSTS OF THE MERCHANDISE OR 4 24 SERVICES CONTRACTED FOR. ADDITIONAL CHARGES MAY BE REQUIRED. 4 25 h. Explain the disposition of theinterest and disclose4 26what fees and expenses may be charged if incurredincome 4 27 generated from investments, include a statement of fees, 4 28 expenses, and taxes which may be deducted, and include a 4 29 statement of the buyer's responsibility for income taxes owed 4 30 on the income, if applicable. 4 31 j.State the name and address of the commissioner.4 32 Include an explanation of regulatory oversight by the 4 33 insurance division in twelve point bold type, in substantially 4 34 the following language: 4 35 THIS CONTRACT MUST BE REPORTED TO THE IOWA INSURANCE 5 1 DIVISION BY THE FIRST DAY OF MARCH OF THE FOLLOWING YEAR. YOU 5 2 MAY CALL THE INSURANCE DIVISION AT (INSERT TELEPHONE NUMBER) 5 3 TO CONFIRM THAT YOUR CONTRACT HAS BEEN REPORTED. WRITTEN 5 4 INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE FOLLOWING 5 5 ADDRESS: IOWA SECURITIES BUREAU, (INSERT ADDRESS). 5 6 Sec. 5. Section 523A.20, Code 1995, is amended to read as 5 7 follows: 5 8 523A.20 INSURANCE DIVISION'S REGULATORY FUND. 5 9 The insurance division may authorize the creation of a 5 10 special revenue fund in the state treasury, to be known as the 5 11 insurance division regulatory fund.Commencing July 1, 1990,5 12and annually thereafter, theThe commissioner shall allocate 5 13 annually from the fees paid pursuant to section 523A.2,one5 14dollartwo dollars for each agreement reported on an 5 15 establishment permit holder's annual report for deposit to the 5 16 regulatory fund. The remainder of the fees collected pursuant 5 17 to section 523A.2 shall be deposited into the general fund of 5 18 the state.However, if the balance of the regulatory fund on5 19that July 1 exceeds two hundred thousand dollars, the5 20allocation to the regulatory fund shall not be made and the5 21total sum of the fees paid pursuant to section 523A.2 shall be5 22deposited in the general fund of the state.In addition, on 5 23 May 1 of19941996 and19951997, the commissioner, to the 5 24 extent necessary to fund consumer education, audits, 5 25 investigations, payments under contract with licensed 5 26 establishments to provide funeral and cemetery merchandise or 5 27 services in the event of statutory noncompliance by the 5 28 initial seller, liquidations, and receiverships, shall assess 5 29 establishment permit holdersfivetwo dollars for each 5 30 agreement reported on the establishment permit holder's annual 5 31 report of sales executed during the preceding year, which 5 32 shall be deposited in the insurance division regulatory fund. 5 33 The moneys in the regulatory fund shall be retained in the 5 34 fund. The moneys are appropriated and, subject to 5 35 authorization by the commissioner, may be used to pay 6 1 auditors, audit expenses, investigative expenses, and the 6 2 expenses of receiverships established pursuant to section 6 3 523A.19. An annual assessment shall not be imposed if the 6 4 current balance of the fund exceeds two hundred thousand 6 5 dollars. 6 6 Sec. 6. NEW SECTION. 523A.21 LICENSE REVOCATION &endash; 6 7 RECOMMENDATION BY COMMISSIONER TO BOARD OF MORTUARY SCIENCE 6 8 EXAMINERS. 6 9 Upon a determination by the commissioner that grounds exist 6 10 for an administrative license revocation or suspension action 6 11 by the board of mortuary science examiners under chapter 156, 6 12 the commissioner may forward to the board the grounds for the 6 13 determination, including all evidence in the possession of the 6 14 commissioner, so that the board may proceed with the matter as 6 15 deemed appropriate. 6 16 Sec. 7. NEW SECTION. 523A.22 LIQUIDATION. 6 17 1. GROUNDS FOR LIQUIDATION. Upon receipt of a written 6 18 request from the board of mortuary science examiners, the 6 19 commissioner may petition the district court for an order 6 20 directing the commissioner to liquidate a funeral 6 21 establishment on any of the following grounds: 6 22 a. The funeral establishment did not deposit funds 6 23 pursuant to section 523A.1 or withdrew funds in a manner 6 24 inconsistent with this chapter and is insolvent. 6 25 b. The funeral establishment did not deposit funds 6 26 pursuant to section 523A.1 or withdrew funds in a manner 6 27 inconsistent with this chapter and the condition of the 6 28 funeral establishment is such that the further transaction of 6 29 business would be hazardous, financially or otherwise, to its 6 30 preneed funeral customers or the public. 6 31 2. LIQUIDATION ORDER. 6 32 a. An order to liquidate the business of a funeral 6 33 establishment shall appoint the commissioner as liquidator and 6 34 shall direct the liquidator to immediately take possession of 6 35 the assets of the funeral establishment and to administer them 7 1 under the general supervision of the court. The liquidator is 7 2 vested with the title to the property, contracts, and rights 7 3 of action and the books and records of the funeral 7 4 establishment ordered liquidated, wherever located, as of the 7 5 entry of the final order of liquidation. The filing or 7 6 recording of the order with the clerk of court and the 7 7 recorder of deeds of the county in which its principal office 7 8 or place of business is located, or, in the case of real 7 9 estate with the recorder of deeds of the county where the 7 10 property is located, is notice as a deed, bill of sale, or 7 11 other evidence of title duly filed or recorded with the 7 12 recorder of deeds. 7 13 b. Upon issuance of an order, the rights and liabilities 7 14 of a funeral establishment and of the funeral establishment's 7 15 creditors, preneed and at-need funeral customers, owners, and 7 16 other persons interested in the funeral establishment's estate 7 17 shall become fixed as of the date of the entry of the order of 7 18 liquidation, except as provided in subsection 14. 7 19 c. At the time of petitioning for an order of liquidation, 7 20 or at any time after the time of petitioning, the 7 21 commissioner, after making appropriate findings of a funeral 7 22 establishment's insolvency, may petition the court for a 7 23 declaration of insolvency. After providing notice and hearing 7 24 as it deems proper, the court may make the declaration. 7 25 d. An order issued under this section shall require 7 26 accounting to the court by the liquidator. Accountings, at a 7 27 minimum, must include all funds received or disbursed by the 7 28 liquidator during the current period. An accounting shall be 7 29 filed within one year of the liquidation order and at such 7 30 other times as the court may require. 7 31 e. Within five days after the initiation of an appeal of 7 32 an order of liquidation, which order has not been stayed, the 7 33 commissioner shall present for the court's approval a plan for 7 34 the continued performance of the funeral establishment's 7 35 obligations during the pendency of an appeal. The plan shall 8 1 provide for the continued performance of preneed and at-need 8 2 funeral contracts in the normal course of events, 8 3 notwithstanding the grounds alleged in support of the order of 8 4 liquidation including the ground of insolvency. If the 8 5 defendant funeral establishment's financial condition, in the 8 6 judgment of the commissioner, will not support the full 8 7 performance of all obligations during the appeal pendency 8 8 period, the plan may prefer the claims of certain at-need and 8 9 preneed funeral customers and claimants over creditors and 8 10 interested parties as well as other at-need and preneed 8 11 funeral customers and claimants, as the commissioner finds to 8 12 be fair and equitable considering the relative circumstances 8 13 of such at-need and preneed funeral customers and claimants. 8 14 The court shall examine the plan submitted by the commissioner 8 15 and if it finds the plan to be in the best interests of the 8 16 parties, the court shall approve the plan. An action shall 8 17 not lie against the commissioner or any of the commissioner's 8 18 deputies, agents, clerks, assistants, or attorneys by any 8 19 party based on preference in an appeal pendency plan approved 8 20 by the court. 8 21 3. POWERS OF LIQUIDATOR. 8 22 a. The liquidator may do any of the following: 8 23 (1) Appoint a special deputy to act for the liquidator 8 24 under this chapter, and determine the special deputy's 8 25 reasonable compensation. The special deputy shall have all 8 26 the powers of the liquidator granted by this section. The 8 27 special deputy shall serve at the pleasure of the liquidator. 8 28 (2) Hire employees and agents, legal counsel, accountants, 8 29 appraisers, consultants, and other personnel as the 8 30 commissioner may deem necessary to assist in the liquidation. 8 31 (3) With the approval of the court fix reasonable 8 32 compensation of employees and agents, legal counsel, 8 33 accountants, appraisers, and consultants. 8 34 (4) Pay reasonable compensation to persons appointed and 8 35 defray from the funds or assets of the funeral establishment 9 1 all expenses of taking possession of, conserving, conducting, 9 2 liquidating, disposing of, or otherwise dealing with the 9 3 business and property of the funeral establishment. If the 9 4 property of the funeral establishment does not contain 9 5 sufficient cash or liquid assets to defray the costs incurred, 9 6 the commissioner may advance the costs so incurred out of the 9 7 insurance division regulatory fund. Amounts so advanced for 9 8 expenses of administration shall be repaid to the insurance 9 9 division regulatory fund for the use of the division out of 9 10 the first available moneys of the funeral establishment. 9 11 (5) Hold hearings, subpoena witnesses, and compel their 9 12 attendance, administer oaths, examine a person under oath, and 9 13 compel a person to subscribe to the person's testimony after 9 14 it has been correctly reduced to writing, and in connection to 9 15 the proceedings require the production of books, papers, 9 16 records, or other documents which the liquidator deems 9 17 relevant to the inquiry. 9 18 (6) Collect debts and moneys due and claims belonging to 9 19 the funeral establishment, wherever located. Pursuant to this 9 20 subparagraph, the liquidator may do any of the following: 9 21 (a) Institute timely action in other jurisdictions to 9 22 forestall garnishment and attachment proceedings against 9 23 debts. 9 24 (b) Perform acts as are necessary or expedient to collect, 9 25 conserve, or protect its assets or property, including the 9 26 power to sell, compound, compromise, or assign debts for 9 27 purposes of collection upon terms and conditions as the 9 28 liquidator deems best. 9 29 (c) Pursue any creditor's remedies available to enforce 9 30 claims. 9 31 (7) Conduct public and private sales of the property of 9 32 the funeral establishment. 9 33 (8) Use assets of the funeral establishment under a 9 34 liquidation order to transfer obligations of preneed funeral 9 35 contracts to a solvent funeral establishment, if the transfer 10 1 can be accomplished without prejudice to applicable priorities 10 2 under subsection 18. 10 3 (9) Acquire, hypothecate, encumber, lease, improve, sell, 10 4 transfer, abandon, or otherwise dispose of or deal with 10 5 property of the funeral establishment at its market value or 10 6 upon terms and conditions as are fair and reasonable. The 10 7 liquidator shall also have power to execute, acknowledge, and 10 8 deliver deeds, assignments, releases, and other instruments 10 9 necessary to effectuate a sale of property or other 10 10 transaction in connection with the liquidation. 10 11 (10) Borrow money on the security of the funeral 10 12 establishment's assets or without security and execute and 10 13 deliver documents necessary to that transaction for the 10 14 purpose of facilitating the liquidation. Money borrowed 10 15 pursuant to this subparagraph shall be repaid as an 10 16 administrative expense and shall have priority over any other 10 17 class 1 claims under the priority of distribution established 10 18 in subsection 18. 10 19 (11) Enter into contracts as necessary to carry out the 10 20 order to liquidate and affirm or disavow contracts to which 10 21 the funeral establishment is a party. 10 22 (12) Continue to prosecute and to institute in the name of 10 23 the funeral establishment or in the liquidator's own name any 10 24 and all suits and other legal proceedings, in this state or 10 25 elsewhere, and to abandon the prosecution of claims the 10 26 liquidator deems unprofitable to pursue further. 10 27 (13) Prosecute an action on behalf of the creditors, at- 10 28 need funeral customers, preneed funeral customers, or owners 10 29 against an officer of the funeral establishment or any other 10 30 person. 10 31 (14) Remove records and property of the funeral 10 32 establishment to the offices of the commissioner or to other 10 33 places as may be convenient for the purposes of efficient and 10 34 orderly execution of the liquidation. 10 35 (15) Deposit in one or more banks in this state sums as 11 1 are required for meeting current administration expenses and 11 2 distributions. 11 3 (16) Unless the court orders otherwise, invest funds not 11 4 currently needed. 11 5 (17) File necessary documents for recording in the office 11 6 of a recorder of deeds or record office in this state or 11 7 elsewhere where property of the funeral establishment is 11 8 located. 11 9 (18) Assert defenses available to the funeral 11 10 establishment as against third persons including statutes of 11 11 limitations, statutes of fraud, and the defense of usury. A 11 12 waiver of a defense by the funeral establishment after a 11 13 petition in liquidation has been filed shall not bind the 11 14 liquidator. 11 15 (19) Exercise and enforce the rights, remedies, and powers 11 16 of a creditor, at-need funeral customer, preneed funeral 11 17 customer, or owner, including the power to avoid transfer or 11 18 lien that may be given by the general law and that is not 11 19 included within subsections 7 through 9. 11 20 (20) Intervene in a proceeding wherever instituted that 11 21 might lead to the appointment of a receiver or trustee, and 11 22 act as the receiver or trustee whenever the appointment is 11 23 offered. 11 24 (21) Exercise powers now held or later conferred upon 11 25 receivers by the laws of this state which are not inconsistent 11 26 with this chapter. 11 27 b. This section does not limit the liquidator or exclude 11 28 the liquidator from exercising a power not listed in paragraph 11 29 "a" that may be necessary or appropriate to accomplish the 11 30 purposes of this chapter. 11 31 4. NOTICE TO CREDITORS AND OTHERS. 11 32 a. Unless the court otherwise directs, the liquidator 11 33 shall give notice of the liquidation order as soon as possible 11 34 by doing all of the following: 11 35 (1) By first class mail to all persons known or reasonably 12 1 expected to have claims against the funeral establishment, 12 2 including at-need and preneed funeral customers, by mailing a 12 3 notice to their last known address as indicated by the records 12 4 of the funeral establishment. 12 5 (2) By publication in a newspaper of general circulation 12 6 in the county in which the funeral establishment has its 12 7 principal place of business and in other locations as the 12 8 liquidator deems appropriate. 12 9 b. Notice to potential claimants under paragraph "a" shall 12 10 require claimants to file with the liquidator their claims 12 11 together with proper proofs of the claim under subsection 13 12 12 on or before a date the liquidator shall specify in the 12 13 notice. Claimants shall keep the liquidator informed of their 12 14 changes of address, if any. 12 15 c. If notice is given pursuant to this section, the 12 16 distribution of assets of the funeral establishment under this 12 17 chapter shall be conclusive with respect to claimants, whether 12 18 or not a claimant actually received notice. 12 19 5. ACTIONS BY AND AGAINST LIQUIDATOR. 12 20 a. After the issuance of an order appointing a liquidator 12 21 of a funeral establishment, an action at law or equity shall 12 22 not be brought against the funeral establishment in this state 12 23 or elsewhere, and existing actions shall not be maintained or 12 24 further presented after issuance of the order. Whenever in 12 25 the liquidator's judgment, protection of the estate of the 12 26 funeral establishment necessitates intervention in an action 12 27 against the funeral establishment that is pending outside this 12 28 state, the liquidator may intervene in the action. The 12 29 liquidator may defend, at the expense of the estate of the 12 30 funeral establishment, an action in which the liquidator 12 31 intervenes under this section. 12 32 b. Within two years or such additional time as applicable 12 33 law may permit, the liquidator, after the issuance of an order 12 34 for liquidation, may institute an action or proceeding on 12 35 behalf of the estate of the funeral establishment upon any 13 1 cause of action against which the period of limitation fixed 13 2 by applicable law has not expired at the time of the filing of 13 3 the petition upon which the order is entered. If a period of 13 4 limitation is fixed by agreement for instituting a suit or 13 5 proceeding upon a claim, or for filing a claim, proof of 13 6 claim, proof of loss, demand, notice, or the like, or if in a 13 7 proceeding, judicial or otherwise, a period of limitation is 13 8 fixed in the proceeding or pursuant to applicable law for 13 9 taking an action, filing a claim or pleading, or doing an act, 13 10 and if the period had not expired at the date of the filing of 13 11 the petition, the liquidator may, for the benefit of the 13 12 estate, take any action or do any act, required of or 13 13 permitted to the funeral establishment, within a period of one 13 14 hundred eighty days subsequent to the entry of an order for 13 15 liquidation, or within a further period as is shown to the 13 16 satisfaction of the court not to be unfairly prejudicial to 13 17 the other party. 13 18 c. A statute of limitation or defense of laches shall not 13 19 run with respect to an action against a funeral establishment 13 20 between the filing of a petition for liquidation against the 13 21 funeral establishment and the denial of the petition. An 13 22 action against the funeral establishment that might have been 13 23 commenced when the petition was filed may be commenced for at 13 24 least sixty days after the petition is denied. 13 25 6. COLLECTION AND LIST OF ASSETS. 13 26 a. As soon as practicable after the liquidation order but 13 27 not later than one hundred twenty days after such order, the 13 28 liquidator shall prepare in duplicate a list of the funeral 13 29 establishment's assets. The list shall be amended or 13 30 supplemented as the liquidator may determine. One copy shall 13 31 be filed in the office of the clerk of court and one copy 13 32 shall be retained for the liquidator's files. Amendments and 13 33 supplements shall be similarly filed. 13 34 b. The liquidator shall reduce the assets to a degree of 13 35 liquidity that is consistent with the effective execution of 14 1 the liquidation. 14 2 c. A submission to the court for distribution of assets in 14 3 accordance with subsection 11 fulfills the requirements of 14 4 paragraph "a". 14 5 7. FRAUDULENT TRANSFERS PRIOR TO PETITION. 14 6 a. A transfer made and an obligation incurred by a funeral 14 7 establishment within one year prior to the filing of a 14 8 successful petition for liquidation under this chapter is 14 9 fraudulent as to then existing and future creditors if made or 14 10 incurred without fair consideration, or with actual intent to 14 11 hinder, delay, or defraud either existing or future creditors. 14 12 A fraudulent transfer made or an obligation incurred by a 14 13 funeral establishment ordered to be liquidated under this 14 14 chapter may be avoided by the receiver, except as to a person 14 15 who in good faith is a purchaser, lienor, or obligee for a 14 16 present fair equivalent value. A purchaser, lienor, or 14 17 obligee, who in good faith has given a consideration less than 14 18 fair for such transfer, lien, or obligation, may retain the 14 19 property, lien, or obligation as security for repayment. The 14 20 court may, on due notice, order any such transfer or 14 21 obligation to be preserved for the benefit of the estate, and 14 22 in that event, the receiver shall succeed to and may enforce 14 23 the rights of the purchaser, lienor, or obligee. 14 24 b. (1) A transfer of property other than real property is 14 25 made when it becomes perfected so that a subsequent lien 14 26 obtainable by legal or equitable proceedings on a simple 14 27 contract could not become superior to the rights of the 14 28 transferee under subsection 9, paragraph "c". 14 29 (2) A transfer of real property is made when it becomes 14 30 perfected so that a subsequent bona fide purchaser from the 14 31 funeral establishment could not obtain rights superior to the 14 32 rights of the transferee. 14 33 (3) A transfer which creates an equitable lien is not 14 34 perfected if there are available means by which a legal lien 14 35 could be created. 15 1 (4) A transfer not perfected prior to the filing of a 15 2 petition for liquidation is deemed to be made immediately 15 3 before the filing of the successful petition. 15 4 (5) This subsection applies whether or not there are or 15 5 were creditors who might have obtained a lien or persons who 15 6 might have become bona fide purchasers. 15 7 8. FRAUDULENT TRANSFER AFTER PETITION. 15 8 a. After a petition for liquidation has been filed a 15 9 transfer of real property of the funeral establishment made to 15 10 a person acting in good faith is valid against the liquidator 15 11 if made for a present fair equivalent value. If the transfer 15 12 was not made for a present fair equivalent value, then the 15 13 transfer is valid to the extent of the present consideration 15 14 actually paid for which amount the transferee shall have a 15 15 lien on the property transferred. The commencement of a 15 16 proceeding in liquidation is constructive notice upon the 15 17 recording of a copy of the petition for or order of 15 18 liquidation with the recorder of deeds in the county where any 15 19 real property in question is located. The exercise by a court 15 20 of the United States or a state or jurisdiction to authorize a 15 21 judicial sale of real property of the funeral establishment 15 22 within a county in a state shall not be impaired by the 15 23 pendency of a proceeding unless the copy is recorded in the 15 24 county prior to the consummation of the judicial sale. 15 25 b. After a petition for liquidation has been filed and 15 26 before either the receiver takes possession of the property of 15 27 the funeral establishment or an order of liquidation is 15 28 granted: 15 29 (1) A transfer of the property, other than real property, 15 30 of the funeral establishment made to a person acting in good 15 31 faith is valid against the receiver if made for a present fair 15 32 equivalent value. If the transfer was not made for a present 15 33 fair equivalent value, then the transfer is valid to the 15 34 extent of the present consideration actually paid for which 15 35 amount the transferee shall have a lien on the property 16 1 transferred. 16 2 (2) If acting in good faith, a person indebted to the 16 3 funeral establishment or holding property of the funeral 16 4 establishment may pay the debt or deliver the property, or any 16 5 part of the property, to the funeral establishment or upon the 16 6 funeral establishment's order as if the petition were not 16 7 pending. 16 8 (3) A person having actual knowledge of the pending 16 9 liquidation is not acting in good faith. 16 10 (4) A person asserting the validity of a transfer under 16 11 this subsection has the burden of proof. Except as provided 16 12 in this subsection, a transfer by or on behalf of the funeral 16 13 establishment after the date of the petition for liquidation 16 14 by any person other than the liquidator is not valid against 16 15 the liquidator. 16 16 c. A person receiving any property from the funeral 16 17 establishment or any benefit of the property of the funeral 16 18 establishment which is a fraudulent transfer under paragraph 16 19 "a" is personally liable for the property or benefit and shall 16 20 account to the liquidator. 16 21 d. This chapter does not impair the negotiability of 16 22 currency or negotiable instruments. 16 23 9. VOIDABLE PREFERENCES AND LIENS. 16 24 a. (1) A preference is a transfer of the property of a 16 25 funeral establishment to or for the benefit of a creditor for 16 26 an antecedent debt made or suffered by the funeral 16 27 establishment within one year before the filing of a 16 28 successful petition for liquidation under this chapter, the 16 29 effect of which transfer may be to enable the creditor to 16 30 obtain a greater percentage of this debt than another creditor 16 31 of the same class would receive. If a liquidation order is 16 32 entered while the funeral establishment is already subject to 16 33 a receivership, then the transfers are preferences if made or 16 34 suffered within one year before the filing of the successful 16 35 petition for the receivership, or within two years before the 17 1 filing of the successful petition for liquidation, whichever 17 2 time is shorter. 17 3 (2) A preference may be avoided by the liquidator if any 17 4 of the following exist: 17 5 (a) The funeral establishment was insolvent at the time of 17 6 the transfer. 17 7 (b) The transfer was made within four months before the 17 8 filing of the petition. 17 9 (c) At the time the transfer was made, the creditor 17 10 receiving it or to be benefited by the transfer or the 17 11 creditor's agent acting with reference to the transfer had 17 12 reasonable cause to believe that the funeral establishment was 17 13 insolvent or was about to become insolvent. 17 14 (d) The creditor receiving the transfer was an officer, or 17 15 an employee, attorney, or other person who was in fact in a 17 16 position of comparable influence in the funeral establishment 17 17 to an officer whether or not the person held the position of 17 18 an officer, owner, or other person, firm, corporation, 17 19 association, or aggregation of persons with whom the funeral 17 20 establishment did not deal at arm's length. 17 21 (3) Where the preference is voidable, the liquidator may 17 22 recover the property. If the property has been converted, the 17 23 liquidator may recover its value from a person who has 17 24 received or converted the property. However, if a bona fide 17 25 purchaser or lienor has given less than fair equivalent value, 17 26 the purchaser or lienor shall have a lien upon the property to 17 27 the extent of the consideration actually given. Where a 17 28 preference by way of lien or security interest is voidable, 17 29 the court may on due notice order the lien or security 17 30 interest to be preserved for the benefit of the estate, in 17 31 which event the lien or title shall pass to the liquidator. 17 32 b. (1) A transfer of property other than real property is 17 33 made when it becomes perfected so that a subsequent lien 17 34 obtainable by legal or equitable proceedings on a simple 17 35 contract could not become superior to the rights of the 18 1 transferee. 18 2 (2) A transfer of real property is made when it becomes 18 3 perfected so that a subsequent bona fide purchaser from the 18 4 funeral establishment could not obtain rights superior to the 18 5 rights of the transferee. 18 6 (3) A transfer which creates an equitable lien is not 18 7 perfected if there are available means by which a legal lien 18 8 could be created. 18 9 (4) A transfer not perfected prior to the filing of a 18 10 petition for liquidation is deemed to be made immediately 18 11 before the filing of the successful petition. 18 12 (5) This subsection applies whether or not there are or 18 13 were creditors who might have obtained liens or persons who 18 14 might have become bona fide purchasers. 18 15 c. (1) A lien obtainable by legal or equitable 18 16 proceedings upon a simple contract is one arising in the 18 17 ordinary course of the proceedings upon the entry or docketing 18 18 of a judgment or decree, or upon attachment, garnishment, 18 19 execution, or like process, whether before, upon, or after 18 20 judgment or decree and whether before or upon levy. It does 18 21 not include liens which under applicable law are given a 18 22 special priority over other liens which are prior in time. 18 23 (2) A lien obtainable by legal or equitable proceedings 18 24 could become superior to the rights of a transferee, or a 18 25 purchaser could obtain rights superior to the rights of a 18 26 transferee within the meaning of paragraph "b", if such 18 27 consequences would follow only from the lien or purchase 18 28 itself, or from the lien or purchase followed by a step wholly 18 29 within the control of the respective lienholder or purchaser, 18 30 with or without the aid of ministerial action by public 18 31 officials. However, a lien could not become superior and a 18 32 purchase could not create superior rights for the purpose of 18 33 paragraph "b" through an act subsequent to the obtaining of a 18 34 lien or subsequent to a purchase which requires the agreement 18 35 or concurrence of any third party or which requires further 19 1 judicial action or ruling. 19 2 d. A transfer of property for or on account of a new and 19 3 contemporaneous consideration, which is under paragraph "b" 19 4 made or suffered after the transfer because of delay in 19 5 perfecting it, does not become a transfer for or on account of 19 6 an antecedent debt if any acts required by the applicable law 19 7 to be performed in order to perfect the transfer as against 19 8 liens or a bona fide purchaser's rights are performed within 19 9 twenty-one days or any period expressly allowed by the law, 19 10 whichever is less. A transfer to secure a future loan, if a 19 11 loan is actually made, or a transfer which becomes security 19 12 for a future loan, shall have the same effect as a transfer 19 13 for or on account of a new and contemporaneous consideration. 19 14 e. If a lien voidable under paragraph "a", subparagraph 19 15 (2), has been dissolved by the furnishing of a bond or other 19 16 obligation, the surety on which has been indemnified directly 19 17 or indirectly by the transfer or the creation of a lien upon 19 18 property of a funeral establishment before the filing of a 19 19 petition under this chapter which results in a liquidation 19 20 order, the indemnifying transfer or lien is also voidable. 19 21 f. The property affected by a lien voidable under 19 22 paragraphs "a" and "e" is discharged from the lien. The 19 23 property and any of the indemnifying property transferred to 19 24 or for the benefit of a surety shall pass to the liquidator. 19 25 However, the court may on due notice order a lien to be 19 26 preserved for the benefit of the estate and the court may 19 27 direct that the conveyance be executed to evidence the title 19 28 of the liquidator. 19 29 g. The court shall have summary jurisdiction of a 19 30 proceeding by the liquidator to hear and determine the rights 19 31 of the parties under this section. Reasonable notice of 19 32 hearing in the proceeding shall be given to all parties in 19 33 interest, including the obligee of a releasing bond or other 19 34 like obligation. Where an order is entered for the recovery 19 35 of indemnifying property in kind or for the avoidance of an 20 1 indemnifying lien, upon application of any party in interest, 20 2 the court shall in the same proceeding ascertain the value of 20 3 the property or lien. If the value is less than the amount 20 4 for which the property is indemnified or less than the amount 20 5 of the lien, the transferee or lienholder may elect to retain 20 6 the property or lien upon payment of its value, as ascertained 20 7 by the court, to the liquidator within the time as fixed by 20 8 the court. 20 9 h. The liability of a surety under a releasing bond or 20 10 other like obligation is discharged to the extent of the value 20 11 of the indemnifying property recovered or the indemnifying 20 12 lien nullified and avoided by the liquidator. Where the 20 13 property is retained under paragraph "g", the liability of the 20 14 surety is discharged to the extent of the amount paid to the 20 15 liquidator. 20 16 i. If a creditor has been preferred for property which 20 17 becomes a part of the funeral establishment's estate, and 20 18 afterward in good faith gives the funeral establishment 20 19 further credit without security of any kind, the amount of the 20 20 new credit remaining unpaid at the time of the petition may be 20 21 set off against the preference which would otherwise be 20 22 recoverable from the creditor. 20 23 j. If within four months before the filing of a successful 20 24 petition for liquidation under this chapter, or at any time in 20 25 contemplation of a proceeding to liquidate, a funeral 20 26 establishment, directly or indirectly, pays money or transfers 20 27 property to an attorney for services rendered or to be 20 28 rendered, the transaction may be examined by the court on its 20 29 own motion or shall be examined by the court on petition of 20 30 the liquidator. The payment or transfer shall be held valid 20 31 only to the extent of a reasonable amount to be determined by 20 32 the court. The excess may be recovered by the liquidator for 20 33 the benefit of the estate. However, where the attorney is in 20 34 a position of influence in the funeral establishment or an 20 35 affiliate, payment of any money or the transfer of any 21 1 property to the attorney for services rendered or to be 21 2 rendered shall be governed by the provision of paragraph "a", 21 3 subparagraph (2), subparagraph subdivision (d). 21 4 k. (1) An officer, manager, employee, shareholder, 21 5 subscriber, attorney, or any other person acting on behalf of 21 6 the funeral establishment who knowingly participates in giving 21 7 any preference when the person has reasonable cause to believe 21 8 the funeral establishment is or is about to become insolvent 21 9 at the time of the preference is personally liable to the 21 10 liquidator for the amount of the preference. There is an 21 11 inference that reasonable cause exists if the transfer was 21 12 made within four months before the date of filing of this 21 13 successful petition for liquidation. 21 14 (2) A person receiving property from the funeral 21 15 establishment or the benefit of the property of the funeral 21 16 establishment as a preference voidable under paragraph "a" is 21 17 personally liable for the property and shall account to the 21 18 liquidator. 21 19 (3) This subsection shall not prejudice any other claim by 21 20 the liquidator against any person. 21 21 10. CLAIMS OF HOLDER OF VOID OR VOIDABLE RIGHTS. 21 22 a. A claim of a creditor who has received or acquired a 21 23 preference, lien, conveyance, transfer, assignment, or 21 24 encumbrance, voidable under this chapter, shall not be allowed 21 25 unless the creditor surrenders the preference, lien, 21 26 conveyance, transfer, assignment, or encumbrance. If the 21 27 avoidance is effected by a proceeding in which a final 21 28 judgment has been entered, the claim shall not be allowed 21 29 unless the money is paid or the property is delivered to the 21 30 liquidator within thirty days from the date of the entering of 21 31 the final judgment. However, the court having jurisdiction 21 32 over the liquidation may allow further time if there is an 21 33 appeal or other continuation of the proceeding. 21 34 b. A claim allowable under paragraph "a" by reason of a 21 35 voluntary or involuntary avoidance, preference, lien, 22 1 conveyance, transfer, assignment, or encumbrance may be filed 22 2 as an excused late filing under subsection 12, if filed within 22 3 thirty days from the date of the avoidance or within the 22 4 further time allowed by the court under paragraph "a". 22 5 11. LIQUIDATOR'S PROPOSAL TO DISTRIBUTE ASSETS. 22 6 a. From time to time as assets become available, the 22 7 liquidator shall make application to the court for approval of 22 8 a proposal to disburse assets out of marshaled assets. 22 9 b. The proposal shall at least include provisions for all 22 10 of the following: 22 11 (1) Reserving amounts for the payment of all the 22 12 following: 22 13 (a) Expenses of administration. 22 14 (b) To the extent of the value of the security held, the 22 15 payment of claims of secured creditors. 22 16 (c) Claims falling within the priorities established in 22 17 subsection 18, paragraphs "a" and "b". 22 18 (2) Disbursement of the assets marshaled to date and 22 19 subsequent disbursement of assets as they become available. 22 20 c. Action on the application may be taken by the court 22 21 provided that the liquidator's proposal complies with 22 22 paragraph "b". 22 23 12. FILING OF CLAIMS. 22 24 a. Proof of all claims shall be filed with the liquidator 22 25 in the form required by subsection 13 on or before the last 22 26 day for filing specified in the notice required under 22 27 subsection 4. 22 28 b. The liquidator may permit a claimant making a late 22 29 filing to share in distributions, whether past or future, as 22 30 if the claimant were not late, to the extent that the payment 22 31 will not prejudice the orderly administration of the 22 32 liquidation under any of the following circumstances: 22 33 (1) The existence of the claim was not known to the 22 34 claimant and that the claimant filed the claim as promptly as 22 35 reasonably possible after learning of it. 23 1 (2) A transfer to a creditor was avoided under subsections 23 2 7 through 9, or was voluntarily surrendered under subsection 23 3 10, and that the filing satisfies the conditions of subsection 23 4 10. 23 5 (3) The valuation under subsection 17 of security held by 23 6 a secured creditor shows a deficiency, which is filed within 23 7 thirty days after the valuation. 23 8 c. The liquidator may consider any claim filed late and 23 9 permit the claimant to receive distributions which are 23 10 subsequently declared on any claims of the same or lower 23 11 priority if the payment does not prejudice the orderly 23 12 administration of the liquidation. The late-filing claimant 23 13 shall receive at each distribution the same percentage of the 23 14 amount allowed on the claim as is then being paid to claimants 23 15 of any lower priority. This shall continue until the claim 23 16 has been paid in full. 23 17 13. PROOF OF CLAIM. 23 18 a. Proof of claim shall consist of a statement signed by 23 19 the claimant that includes all of the following that are 23 20 applicable: 23 21 (1) The particulars of the claim, including the 23 22 consideration given for it. 23 23 (2) The identity and amount of the security on the claim. 23 24 (3) The payments, if any, made on the debt. 23 25 (4) A statement that the sum claimed is justly owing and 23 26 that there is no setoff, counterclaim, or defense to the 23 27 claim. 23 28 (5) Any right of priority of payment or other specific 23 29 right asserted by the claimant. 23 30 (6) A copy of the written instrument which is the 23 31 foundation of the claim. 23 32 (7) The name and address of the claimant and the attorney 23 33 who represents the claimant, if any. 23 34 b. A claim need not be considered or allowed if it does 23 35 not contain all the information identified in paragraph "a" 24 1 which is applicable. The liquidator may require that a 24 2 prescribed form be used and may require that other information 24 3 and documents be included. 24 4 c. At any time the liquidator may request the claimant to 24 5 present information or evidence supplementary to that required 24 6 under paragraph "a", and may take testimony under oath, 24 7 require production of affidavits or depositions, or otherwise 24 8 obtain additional information or evidence. 24 9 d. A judgment or order against a funeral establishment 24 10 entered after the date of filing of a successful petition for 24 11 liquidation, or a judgment or order against the funeral 24 12 establishment entered at any time by default or by collusion 24 13 need not be considered as evidence of liability or of the 24 14 amount of damages. A judgment or order against a funeral 24 15 establishment before the filing of the petition need not be 24 16 considered as evidence of liability or of the amount of 24 17 damages. 24 18 14. SPECIAL CLAIMS. 24 19 a. A claim may be allowed even if contingent, if it is 24 20 filed pursuant to subsection 12. The claim may be allowed and 24 21 the claimant may participate in all distributions declared 24 22 after it is filed to the extent that it does not prejudice the 24 23 orderly administration of the liquidation. 24 24 b. Claims that are due except for the passage of time 24 25 shall be treated as absolute claims are treated. However, the 24 26 claims may be discounted at the legal rate of interest. 24 27 c. Claims made under employment contracts by directors, 24 28 principal officers, or persons in fact performing similar 24 29 functions or having similar powers are limited to payment for 24 30 services rendered prior to the issuance of an order of 24 31 liquidation under subsection 2. 24 32 15. DISPUTED CLAIMS. 24 33 a. If a claim is denied in whole or in part by the 24 34 liquidator, written notice of the determination shall be given 24 35 to the claimant or the claimant's attorney by first class mail 25 1 at the address shown in the proof of claim. Within sixty days 25 2 from the mailing of the notice, the claimant may file 25 3 objections with the liquidator. Unless a filing is made, the 25 4 claimant shall not further object to the determination. 25 5 b. If objections are filed with the liquidator and the 25 6 liquidator does not alter the denial of the claim as a result 25 7 of the objections, the liquidator shall ask the court for a 25 8 hearing as soon as practicable and give notice of the hearing 25 9 by first class mail to the claimant or the claimant's attorney 25 10 and to any other persons directly affected. The notice shall 25 11 be given not less than ten nor more than thirty days before 25 12 the date of the hearing. The matter shall be heard by the 25 13 court or by a court-appointed referee. The referee shall 25 14 submit findings of fact along with a recommendation. 25 15 16. CLAIMS OF OTHER PERSON. If a creditor, whose claim 25 16 against a funeral establishment is secured in whole or in part 25 17 by the undertaking of another person, fails to prove and file 25 18 that claim, then the other person may do so in the creditor's 25 19 name and shall be subrogated to the rights of the creditor, 25 20 whether the claim has been filed by the creditor or by the 25 21 other person in the creditor's name to the extent that the 25 22 other person discharges the undertaking. However, in the 25 23 absence of an agreement with the creditor to the contrary, the 25 24 other person is not entitled to any distribution until the 25 25 amount paid to the creditor on the undertaking plus the 25 26 distributions paid on the claim from the funeral 25 27 establishment's estate to the creditor equal the amount of the 25 28 entire claim of the creditor. An excess received by the 25 29 creditor shall be held by the creditor in trust for the other 25 30 person. 25 31 17. SECURED CREDITOR'S CLAIMS. 25 32 a. The value of security held by a secured creditor shall 25 33 be determined in one of the following ways, as the court may 25 34 direct: 25 35 (1) By converting the security into money according to the 26 1 terms of the agreement pursuant to which the security was 26 2 delivered to the creditors. 26 3 (2) By agreement, arbitration, compromise, or litigation 26 4 between the creditor and the liquidator. 26 5 b. The determination shall be under the supervision and 26 6 control of the court with due regard for the recommendation of 26 7 the liquidator. The amount so determined shall be credited 26 8 upon the secured claim. A deficiency shall be treated as an 26 9 unsecured claim. If the claimant surrenders the security to 26 10 the liquidator, the entire claim shall be allowed as if 26 11 unsecured. 26 12 18. PRIORITY OF DISTRIBUTION. The priority of 26 13 distribution of claims from the funeral establishment's estate 26 14 shall be in accordance with the order in which each class of 26 15 claims is set forth. Claims in each class shall be paid in 26 16 full or adequate funds retained for the payment before the 26 17 members of the next class receive any payment. Subclasses 26 18 shall not be established within a class. The order of 26 19 distribution of claims is as follows: 26 20 a. CLASS 1. The costs and expenses of administration, 26 21 including but not limited to the following: 26 22 (1) The actual and necessary costs of preserving or 26 23 recovering the assets of the funeral establishment. 26 24 (2) Compensation for all authorized services rendered in 26 25 the liquidation. 26 26 (3) Necessary filing fees. 26 27 (4) The fees and mileage payable to witnesses. 26 28 (5) Authorized reasonable attorney's fees and other 26 29 professional services rendered in the liquidation. 26 30 b. CLASS 2. Reasonable compensation to employees for 26 31 services performed to the extent that they do not exceed two 26 32 months of monetary compensation and represent payment for 26 33 services performed within one year before the filing of the 26 34 petition for liquidation. Officers and directors are not 26 35 entitled to the benefit of this priority. The priority is in 27 1 lieu of other similar priority which may be authorized by law 27 2 as to wages or compensation of employees. 27 3 c. CLASS 3. Claims under at-need and preneed funeral 27 4 contracts. 27 5 d. CLASS 4. Claims of general creditors. 27 6 e. CLASS 5. Claims of the federal or any state or local 27 7 government. Claims, including those of a governmental body 27 8 for a penalty or forfeiture, are allowed in this class only to 27 9 the extent of the pecuniary loss sustained from the act, 27 10 transaction, or proceeding out of which the penalty or 27 11 forfeiture arose, with reasonable and actual costs incurred. 27 12 The remainder of such claims shall be postponed to the class 27 13 of claims under paragraph "g". 27 14 f. CLASS 6. Claims filed late or any other claims other 27 15 than claims under paragraph "g". 27 16 g. CLASS 7. The claims of shareholders or other owners. 27 17 19. LIQUIDATOR'S RECOMMENDATIONS TO THE COURT. 27 18 a. The liquidator shall review claims duly filed in the 27 19 liquidation and shall make further investigation as necessary. 27 20 The liquidator may compound, compromise, or in any other 27 21 manner negotiate the amount for which claims will be 27 22 recommended to the court except where the liquidator is 27 23 required by law to accept claims as settled by a person or 27 24 organization. Unresolved disputes shall be determined under 27 25 subsection 15. As soon as practicable, the liquidator shall 27 26 present to the court a report of the claims against the 27 27 funeral establishment with the liquidator's recommendations. 27 28 The report shall include the name and address of each claimant 27 29 and the amount of the claim finally recommended. 27 30 b. The court may approve, disapprove, or modify the report 27 31 on claims by the liquidator. Reports not modified by the 27 32 court within sixty days following submission by the liquidator 27 33 shall be treated by the liquidator as allowed claims, subject 27 34 to later modification or to rulings made by the court pursuant 27 35 to subsection 15. A claim under a policy of insurance shall 28 1 not be allowed for an amount in excess of the applicable 28 2 policy limits. 28 3 20. DISTRIBUTION OF ASSETS. Under the direction of the 28 4 court, the liquidator shall pay distributions in a manner that 28 5 will assure the proper recognition of priorities and a 28 6 reasonable balance between the expeditious completion of the 28 7 liquidation and the protection of unliquidated and 28 8 undetermined claims, including third-party claims. 28 9 Distribution of assets in kind may be made at valuations set 28 10 by agreement between the liquidator and the creditor and 28 11 approved by the court. 28 12 21. UNCLAIMED AND WITHHELD FUNDS. 28 13 a. Unclaimed funds subject to distribution remaining in 28 14 the liquidator's hands when the liquidator is ready to apply 28 15 to the court for discharge, including the amount distributable 28 16 to a creditor, owner, or other person who is unknown or cannot 28 17 be found, shall be deposited with the treasurer of state, and 28 18 shall be paid without interest, except as provided in 28 19 subsection 18, to the person entitled or the person's legal 28 20 representative upon proof satisfactory to the treasurer of 28 21 state of the right to the funds. An amount on deposit not 28 22 claimed within six years from the discharge of the liquidator 28 23 is deemed to have been abandoned and shall become the property 28 24 of the state without formal escheat proceedings and be 28 25 transferred to the insurance division regulatory fund. 28 26 b. Funds withheld under subsection 14 and not distributed 28 27 shall upon discharge of the liquidator be deposited with the 28 28 treasurer of state and paid pursuant to subsection 18. Sums 28 29 remaining which under subsection 18 would revert to the 28 30 undistributed assets of the funeral establishment shall be 28 31 transferred to the insurance division regulatory fund and 28 32 become the property of the state as provided under paragraph 28 33 "a", unless the commissioner in the commissioner's discretion 28 34 petitions the court to reopen the liquidation pursuant to 28 35 subsection 23. 29 1 c. Notwithstanding any other provision of this chapter, 29 2 funds as identified in paragraph "a", with the approval of the 29 3 court, shall be made available to the commissioner for use in 29 4 the detection and prevention of future insolvencies. The 29 5 commissioner shall hold these funds in the insurance division 29 6 regulatory fund and shall pay without interest, except as 29 7 provided in subsection 18, to the person entitled to the funds 29 8 or the person's legal representative upon proof satisfactory 29 9 to the commissioner of the person's right to the funds. The 29 10 funds shall be held by the commissioner for a period of two 29 11 years at which time the rights and duties to the unclaimed 29 12 funds shall vest in the commissioner. 29 13 22. TERMINATION OF PROCEEDINGS. 29 14 a. When all assets justifying the expense of collection 29 15 and distribution have been collected and distributed under 29 16 this chapter, the liquidator shall apply to the court for 29 17 discharge. The court may grant the discharge and make any 29 18 other orders, including an order to transfer remaining funds 29 19 that are uneconomical to distribute, as appropriate. 29 20 b. Any other person may apply to the court at any time for 29 21 an order under paragraph "a". If the application is denied, 29 22 the applicant shall pay the costs and expenses of the 29 23 liquidator in resisting the application, including a 29 24 reasonable attorney's fee. 29 25 23. REOPENING LIQUIDATION. At any time after the 29 26 liquidation proceeding has been terminated and the liquidator 29 27 discharged, the commissioner or other interested party may 29 28 petition the court to reopen the proceedings for good cause 29 29 including the discovery of additional assets. The court shall 29 30 order the proceeding reopened if it is satisfied that there is 29 31 justification for the reopening. 29 32 24. DISPOSITION OF RECORDS DURING AND AFTER TERMINATION OF 29 33 LIQUIDATION. If it appears to the commissioner that the 29 34 records of a funeral establishment in process of liquidation 29 35 or completely liquidated are no longer useful, the 30 1 commissioner may recommend to the court and the court shall 30 2 direct what records shall be retained for future reference and 30 3 what records shall be destroyed. 30 4 25. EXTERNAL AUDIT OF RECEIVER'S BOOKS. The court may 30 5 order audits to be made of the books of the commissioner 30 6 relating to a receivership established under this chapter, and 30 7 a report of each audit shall be filed with the commissioner 30 8 and with the court. The books, records, and other documents 30 9 of the receivership shall be made available to the auditor at 30 10 any time without notice. The expense of an audit shall be 30 11 considered a cost of administration of the receivership. 30 12 Sec. 8. Section 523E.1, subsection 1, Code 1995, is 30 13 amended to read as follows: 30 14 1. If an agreement is made by a person to furnish, upon 30 15 the future death of a person named or implied in the 30 16 agreement,cemeteryfuneral merchandise, a minimum of one 30 17 hundred twenty-five percent of the wholesale cost of the 30 18cemeteryfuneral merchandise, based upon the current 30 19 advertised prices available from a manufacturer or wholesaler 30 20 who has delivered the same or substantially the same type of 30 21 merchandise to the seller during the last twelve months, shall 30 22 be and remain trust funds until purchase of the merchandise or 30 23 the occurrence of the death of the person for whose benefit 30 24 the funds were paid, unless the funds are sooner released to 30 25 the person making the payment by mutual consent of the 30 26 parties. Payments otherwise subject to this section are not 30 27 exempt merely because they are held in certificates of 30 28 deposit. 30 29 Sec. 9. Section 523E.2, subsection 1, paragraphs a and c, 30 30 Code 1995, are amended to read as follows: 30 31 a. Until an agreement is funded by insurance, covered by a 30 32 bond in lieu of a trust fund, or an amount is transferred to 30 33 trust pursuant to section 523E.1, payments subject to section 30 34 523E.1 shall not be commingled with other funds of the seller. 30 35 (1) Unless directly deposited in a trust account in a 31 1 manner consistent with this section, one hundred percent of 31 2 the amount received shall be deposited and held in an escrow 31 3 account in a state or federally insured financial institution. 31 4 (2) All funds held in trust under section 523E.1 shall be 31 5 deposited in a state or federally insured bank, savings and 31 6 loan association, or credit union authorized to conduct 31 7 business in this state, or trust departmentthereofof such 31 8 bank, savings and loan association, or credit union, or in a 31 9 trust company authorized to conduct business in this state, 31 10 within fifteen days after the close of the month of receipt of 31 11 the funds and shall be held as provided in paragraph "g" for 31 12 the designated beneficiary until released pursuant to section 31 13 523E.1. 31 14 c. The seller under an agreement referred to in section 31 15 523E.1 shall file with the commissioner not later than March 1 31 16 of each year a report including the following information: 31 17 (1) The name and address of the seller and the name and 31 18 address of the establishment that will provide thecemetery31 19 funeral services or funeral merchandise. 31 20 (2)The name of the purchaser, beneficiary, and the amount31 21of each agreement under section 523E.1 made in the preceding31 22year and the date on which it was made.The balance of each 31 23 trust account as of the end of the immediately preceding 31 24 calendar year, identified by the name of the purchaser or the 31 25 beneficiary, and a report of any amounts withdrawn from trust 31 26 and the reason for each withdrawal. 31 27 (3)The total value of agreements subject to section31 28523E.1 entered into, the total amount paid pursuant to those31 29agreements, and the total amount deposited in trust as31 30required under section 523E.1, during the preceding year.A 31 31 description of insurance funding outstanding at the end of the 31 32 immediately preceding calendar year, identified by the name of 31 33 the purchaser or the beneficiary, and a report of any 31 34 insurance payments received by the seller. 31 35(4) The amount of any payments received pursuant to32 1agreements reported in previous years in accordance with32 2subparagraphs (2) and (3) and the amount of those payments32 3deposited in trust for each purchaser.32 4(5) The change in status of any trust account, for each32 5purchaser, any other amounts withdrawn from trust and the32 6reason for each withdrawal. However, regular increments of32 7interest or income need not be reported on a yearly basis.32 8(6) The name and address of the financial institution in32 9which trust funds were deposited, and the name and address of32 10each insurance company which funds agreements under section32 11523E.1.32 12(7) The name and address of each purchaser of cemetery32 13merchandise delivered in lieu of trusting pursuant to section32 14523E.1, and a description of that merchandise for each32 15purchaser.32 16(8)(4)TheA complete inventory ofcemeteryfuneral 32 17 merchandiseand its location in the seller's possession that32 18has beendelivered in lieu of trusting pursuant to section 32 19 523E.1.32 20(9) Other information reasonably required by the32 21commissioner for purposes of administration of this chapter.32 22The information required by subparagraphs (7) and (8) shall32 23include, including the location of the merchandise, serial 32 24 numbers or warehouse receipt numbers, identified by the name 32 25 of the purchaser or the beneficiary, and a verified statement 32 26 of a certified public accountant that the certified public 32 27 accountant has conducted a physical inventory of thecemetery32 28 funeral merchandisespecified in subparagraph (8)and that 32 29 each item of that merchandise is in the seller's possession at 32 30 the specified location. The statement shall be on a form 32 31 prescribed by the commissioner.The commissioner shall permit32 32the filing of a unified annual report by a seller subject to32 33both chapter 523A and this chapter.32 34 The report shall be accompanied by a filing fee determined 32 35 by the commissioner which shall be sufficient to defray the 33 1 costs of administering this chapter. 33 2 Sec. 10. Section 523E.8, subsection 1, paragraphs e, h, 33 3 and j, Code 1995, are amended to read as follows: 33 4 e. State clearly whether the agreement is a guaranteed 33 5 price contract or a nonguaranteed price contract. Each 33 6 nonguaranteed price contract shall contain in twelve point 33 7 bold type, an explanation of the consequences in substantially 33 8 the following language: 33 9 THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS CONTRACT 33 10 ARE SUBJECT TO CHANGE IN THE FUTURE. ANY FUNDS PAID UNDER 33 11 THIS CONTRACT ARE ONLY A DEPOSIT TO BE APPLIED, TOGETHER WITH 33 12 ACCRUED INCOME, TOWARD THE FINAL COSTS OF THE MERCHANDISE OR 33 13 SERVICES CONTRACTED FOR. ADDITIONAL CHARGES MAY BE REQUIRED. 33 14 h. Explain the disposition of theinterest and disclose33 15what fees and expenses may be charged if incurredincome 33 16 generated from investments, include a statement of fees, 33 17 expenses, and taxes which may be deducted, and include a 33 18 statement of the buyer's responsibility for income taxes owed 33 19 on the income, if applicable. 33 20 j.State the name and address of the commissioner.33 21 Include an explanation of regulatory oversight by the 33 22 insurance division in twelve point bold type, in substantially 33 23 the following language: 33 24 THIS CONTRACT MUST BE REPORTED TO THE IOWA INSURANCE 33 25 DIVISION BY THE FIRST DAY OF MARCH OF THE FOLLOWING YEAR. YOU 33 26 MAY CALL THE INSURANCE DIVISION AT (INSERT TELEPHONE NUMBER) 33 27 TO CONFIRM THAT YOUR CONTRACT HAS BEEN REPORTED. WRITTEN 33 28 INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE FOLLOWING 33 29 ADDRESS: IOWA SECURITIES BUREAU (INSERT ADDRESS). 33 30 Sec. 11. Section 523E.20, Code 1995, is amended to read as 33 31 follows: 33 32 523E.20 INSURANCE DIVISION'S REGULATORY FUND. 33 33 The insurance division may authorize the creation of a 33 34 special revenue fund in the state treasury, to be known as the 33 35 insurance division regulatory fund.Commencing July 1, 1990,34 1and annually thereafter, theThe commissioner shall allocate 34 2 annually from the fees paid pursuant to section 523E.2,one34 3dollartwo dollars for each agreement reported on an 34 4 establishment permit holder's annual report for deposit to the 34 5 regulatory fund. The remainder of the fees collected pursuant 34 6 to section 523E.2 shall be deposited into the general fund of 34 7 the state. In addition, on May 1 of19941996 and19951997, 34 8 the commissioner, to the extent necessary to fund consumer 34 9 education, audits, investigations, payments under contract 34 10 with licensed establishments to provide funeral and cemetery 34 11 merchandise or services in the event of statutory 34 12 noncompliance by the initial seller, liquidations, and 34 13 receiverships, shall assess establishment permit holdersfive34 14 two dollars for each agreement reported on the establishment 34 15 permit holder's annual report of sales executed during the 34 16 preceding year, which shall be deposited in the insurance 34 17 division regulatory fund.However, if the balance of the34 18regulatory fund on that July 1 exceeds two hundred thousand34 19dollars, the allocation to the regulatory fund shall not be34 20made and the total sum of the fees paid pursuant to section34 21523E.2 shall be deposited in the general fund of the state.34 22 The moneys in the regulatory fund shall be retained in the 34 23 fund. The moneys are appropriated and, subject to 34 24 authorization by the commissioner, may be used to pay 34 25 auditors, audit expenses, investigative expenses, and the 34 26 expenses of receiverships established pursuant to section 34 27 523E.19. An annual assessment shall not be imposed if the 34 28 current balance of the fund exceeds two hundred thousand 34 29 dollars. 34 30 Sec. 12. NEW SECTION. 523E.21 LICENSE REVOCATION &endash; 34 31 RECOMMENDATION BY COMMISSIONER TO BOARD OF MORTUARY SCIENCE 34 32 EXAMINERS. 34 33 Upon a determination by the commissioner that grounds exist 34 34 for an administrative license revocation action by the board 34 35 of mortuary science examiners under chapter 156, the 35 1 commissioner may forward to the board the grounds for the 35 2 determination, including all evidence in the possession of the 35 3 commissioner, so that the board may proceed with the matter as 35 4 deemed appropriate. 35 5 Sec. 13. NEW SECTION. 523J.1 DEFINITIONS. 35 6 As used in this chapter, unless the context otherwise 35 7 requires: 35 8 1. "Abandoned cemetery" means any cemetery where there has 35 9 been a failure to cut grass or weeds or care for graves, grave 35 10 markers, walls, fences, driveways, and buildings, or for which 35 11 proper records have not been maintained. 35 12 2. "Cemetery" means a cemetery, mausoleum, columbarium, or 35 13 other space held for the purpose of burial, entombment, or 35 14 inurnment of human remains, and which is subject to this 35 15 chapter. 35 16 3. "Commissioner" means the commissioner of insurance or 35 17 the deputy appointed under section 502.601. 35 18 4. "Interment rights" means a right of use conveyed by 35 19 contract or property ownership to inter human rights in a 35 20 columbarium, grave, mausoleum, lawn crypt, or undeveloped 35 21 space. 35 22 5. "Perpetual care cemetery" means a cemetery which has 35 23 established a perpetual care fund for the maintenance, repair, 35 24 and care of all interment spaces subject to perpetual care 35 25 within the cemetery in compliance with section 566A.3 or 35 26 566A.4. 35 27 Sec. 14. NEW SECTION. 523J.2 CEMETERIES COMMENCING 35 28 BUSINESS AFTER JULY 1, 1995. 35 29 A cemetery which is organized or commences business in this 35 30 state on or after July 1, 1995, shall operate as a perpetual 35 31 care cemetery and is subject to this chapter and other 35 32 applicable law. 35 33 Sec. 15. NEW SECTION. 523J.3 PERMIT REQUIREMENTS. 35 34 1. A perpetual care cemetery shall not sell or offer 35 35 interment rights to the public without a permit as provided 36 1 for in this section. 36 2 2. Applications for a permit shall be made to and filed 36 3 with the commissioner on forms approved by the commissioner 36 4 and accompanied by a filing fee of twenty dollars. If the 36 5 application contains the following information, the 36 6 commissioner shall issue the license: 36 7 (a) The name and principal address of the applicant. 36 8 (b) The identity of the applicant's owner or owners. 36 9 (c) Evidence of a trust fund for cemetery maintenance and 36 10 care in compliance with section 566A.3 or 566A.4. 36 11 3. Each permit issued under this chapter shall expire on 36 12 June 30 of the year following the date of issuance. 36 13 Sec. 16. NEW SECTION. 523J.4 DENIAL, SUSPENSION, OR 36 14 REVOCATION OF PERMIT. 36 15 The commissioner, pursuant to chapter 17A, may deny, 36 16 suspend, or revoke any permit to operate a cemetery if the 36 17 commissioner finds any of the following: 36 18 1. The cemetery has committed a fraudulent practice, or 36 19 the cemetery's trust assets, warehoused merchandise, surety 36 20 bonds, or insurance funding are in material noncompliance with 36 21 chapter 523A or 523E or section 566A.3 or 566A.4. 36 22 2. An owner or officer of the cemetery has been convicted 36 23 of a felony related to the sale of interment rights or the 36 24 sale of funeral services, funeral merchandise, or cemetery 36 25 merchandise, as defined in section 523A.5, subsection 2, 36 26 paragraphs "a" and "b", and section 523E.5, subsection 2, 36 27 paragraph "a". 36 28 Sec. 17. NEW SECTION. 523J.5 LIQUIDATION. 36 29 1. GROUNDS FOR LIQUIDATION. The commissioner may petition 36 30 the district court for an order directing the commissioner to 36 31 liquidate a perpetual care cemetery on any of the following 36 32 grounds: 36 33 a. The cemetery's trust fund is in material noncompliance 36 34 with the requirements of section 566A.3 or 566A.4 and is 36 35 insolvent. 37 1 b. The cemetery's trust fund is in material noncompliance 37 2 with the requirements of section 566A.3 or 566A.4 and the 37 3 condition of the cemetery is such that the further transaction 37 4 of business would be hazardous, financially or otherwise, to 37 5 its customers or the public. 37 6 c. The cemetery has been abandoned. 37 7 2. LIQUIDATION ORDER. 37 8 a. An order to liquidate the business of a perpetual care 37 9 cemetery shall appoint the commissioner as liquidator and 37 10 shall direct the liquidator to immediately take possession of 37 11 the assets of the cemetery and to administer them under the 37 12 general supervision of the court. The liquidator is vested 37 13 with the title to the property, contracts, and rights of 37 14 action and the books and records of the cemetery ordered 37 15 liquidated, wherever located, as of the entry of the final 37 16 order of liquidation. The filing or recording of the order 37 17 with the clerk of court and the recorder of deeds of the 37 18 county in which its principal office or place of business is 37 19 located, or, in the case of real estate with the recorder of 37 20 deeds of the county where the property is located, is notice 37 21 as a deed, bill of sale, or other evidence of title duly filed 37 22 or recorded with the recorder of deeds. 37 23 b. Upon issuance of an order, the rights and liabilities 37 24 of a cemetery and of the cemetery's creditors, customers, 37 25 owners, and other persons interested in the cemetery's estate 37 26 shall become fixed as of the date of the entry of the order of 37 27 liquidation, except as provided in subsection 14. 37 28 c. At the time of petitioning for an order of liquidation, 37 29 or at any time after the time of petitioning, the 37 30 commissioner, after making appropriate findings of a 37 31 cemetery's insolvency, may petition the court for a 37 32 declaration of insolvency. After providing notice and hearing 37 33 as it deems proper, the court may make the declaration. 37 34 d. An order issued under this section shall require 37 35 accounting to the court by the liquidator. Accountings, at a 38 1 minimum, must include all funds received or disbursed by the 38 2 liquidator during the current period. An accounting shall be 38 3 filed within one year of the liquidation order and at such 38 4 other times as the court may require. 38 5 e. Within five days after the initiation of an appeal of 38 6 an order of liquidation, which order has not been stayed, the 38 7 commissioner shall present for the court's approval a plan for 38 8 the continued performance of the cemetery's obligations during 38 9 the pendency of an appeal. The plan shall provide for the 38 10 continued performance of interment rights contracts in the 38 11 normal course of events, notwithstanding the grounds alleged 38 12 in support of the order of liquidation including the ground of 38 13 insolvency. If the defendant cemetery's financial condition, 38 14 in the judgment of the commissioner, will not support the full 38 15 performance of all obligations during the appeal pendency 38 16 period, the plan may prefer the claims of certain customers 38 17 and claimants over creditors and interested parties as well as 38 18 other customers and claimants, as the commissioner finds to be 38 19 fair and equitable considering the relative circumstances of 38 20 such customers and claimants. The court shall examine the 38 21 plan submitted by the commissioner and if it finds the plan to 38 22 be in the best interests of the parties, the court shall 38 23 approve the plan. An action shall not lie against the 38 24 commissioner or any of the commissioner's deputies, agents, 38 25 clerks, assistants, or attorneys by any party based on 38 26 preference in an appeal pendency plan approved by the court. 38 27 3. POWERS OF LIQUIDATOR. 38 28 a. The liquidator may do any of the following: 38 29 (1) Appoint a special deputy to act for the liquidator 38 30 under this chapter, and determine the special deputy's 38 31 reasonable compensation. The special deputy shall have all 38 32 the powers of the liquidator granted by this section. The 38 33 special deputy shall serve at the pleasure of the liquidator. 38 34 (2) Hire employees and agents, legal counsel, accountants, 38 35 appraisers, consultants, and other personnel as the 39 1 commissioner may deem necessary to assist in the liquidation. 39 2 (3) With the approval of the court fix reasonable 39 3 compensation of employees and agents, legal counsel, 39 4 accountants, appraisers and consultants. 39 5 (4) Pay reasonable compensation to persons appointed and 39 6 defray from the funds or assets of the cemetery all expenses 39 7 of taking possession of, conserving, conducting, liquidating, 39 8 disposing of, or otherwise dealing with the business and 39 9 property of the cemetery. If the property of the cemetery 39 10 does not contain sufficient cash or liquid assets to defray 39 11 the costs incurred, the commissioner may advance the costs so 39 12 incurred out of the insurance division cemetery fund. Amounts 39 13 so advanced for expenses of administration shall be repaid to 39 14 the insurance division cemetery fund for the use of the 39 15 division out of the first available moneys of the cemetery. 39 16 (5) Hold hearings, subpoena witnesses, and compel their 39 17 attendance, administer oaths, examine a person under oath, and 39 18 compel a person to subscribe to the person's testimony after 39 19 it has been correctly reduced to writing, and in connection to 39 20 the proceedings require the production of books, papers, 39 21 records, or other documents which the liquidator deems 39 22 relevant to the inquiry. 39 23 (6) Collect debts and moneys due and claims belonging to 39 24 the cemetery, wherever located. Pursuant to this 39 25 subparagraph, the liquidator may do any of the following: 39 26 (a) Institute timely action in other jurisdictions to 39 27 forestall garnishment and attachment proceedings against 39 28 debts. 39 29 (b) Perform acts as are necessary or expedient to collect, 39 30 conserve, or protect its assets or property, including the 39 31 power to sell, compound, compromise, or assign debts for 39 32 purposes of collection upon terms and conditions as the 39 33 liquidator deems best. 39 34 (c) Pursue any creditor's remedies available to enforce 39 35 claims. 40 1 (7) Conduct public and private sales of the property of 40 2 the cemetery. 40 3 (8) Use assets of the cemetery under a liquidation order 40 4 to transfer obligations of preneed funeral contracts to a 40 5 solvent cemetery, if the transfer can be accomplished without 40 6 prejudice to applicable priorities under subsection 18. 40 7 (9) Acquire, hypothecate, encumber, lease, improve, sell, 40 8 transfer, abandon, or otherwise dispose of or deal with 40 9 property of the cemetery at its market value or upon terms and 40 10 conditions as are fair and reasonable. The liquidator shall 40 11 also have power to execute, acknowledge, and deliver deeds, 40 12 assignments, releases, and other instruments necessary to 40 13 effectuate a sale of property or other transaction in 40 14 connection with the liquidation. 40 15 (10) Borrow money on the security of the cemetery's assets 40 16 or without security and execute and deliver documents 40 17 necessary to that transaction for the purpose of facilitating 40 18 the liquidation. Money borrowed pursuant to this subparagraph 40 19 shall be repaid as an administrative expense and have priority 40 20 over any other class 1 claims under the priority of 40 21 distribution established in subsection 18. 40 22 (11) Enter into contracts as necessary to carry out the 40 23 order to liquidate and affirm or disavow contracts to which 40 24 the cemetery is a party. 40 25 (12) Continue to prosecute and to institute in the name of 40 26 the cemetery or in the liquidator's own name any and all suits 40 27 and other legal proceedings, in this state or elsewhere, and 40 28 to abandon the prosecution of claims the liquidator deems 40 29 unprofitable to pursue further. 40 30 (13) Prosecute an action on behalf of the creditors, 40 31 customers, or owners against an officer of the cemetery or any 40 32 other person. 40 33 (14) Remove records and property of the cemetery to the 40 34 offices of the commissioner or to other places as may be 40 35 convenient for the purposes of efficient and orderly execution 41 1 of the liquidation. 41 2 (15) Deposit in one or more banks in this state sums as 41 3 are required for meeting current administration expenses and 41 4 distributions. 41 5 (16) Unless the court orders otherwise, invest funds not 41 6 currently needed. 41 7 (17) File necessary documents for recording in the office 41 8 of a recorder of deeds or record office in this state or 41 9 elsewhere where property of the cemetery is located. 41 10 (18) Assert defenses available to the cemetery as against 41 11 third persons including statutes of limitations, statutes of 41 12 fraud, and the defense of usury. A waiver of a defense by the 41 13 cemetery after a petition in liquidation has been filed shall 41 14 not bind the liquidator. 41 15 (19) Exercise and enforce the rights, remedies, and powers 41 16 of a creditor, customer, or owner, including the power to 41 17 avoid transfer or lien that may be given by the general law 41 18 and that is not included within subsections 7 through 9. 41 19 (20) Intervene in a proceeding wherever instituted that 41 20 might lead to the appointment of a receiver or trustee, and 41 21 act as the receiver or trustee whenever the appointment is 41 22 offered. 41 23 (21) Exercise powers now held or later conferred upon 41 24 receivers by the laws of this state which are not inconsistent 41 25 with this chapter. 41 26 b. This section does not limit the liquidator or exclude 41 27 the liquidator from exercising a power not listed in paragraph 41 28 "a" that may be necessary or appropriate to accomplish the 41 29 purposes of this chapter. 41 30 4. NOTICE TO CREDITORS AND OTHERS. 41 31 a. Unless the court otherwise directs, the liquidator 41 32 shall give notice of the liquidation order as soon as possible 41 33 by doing all of the following: 41 34 (1) By first class mail to all persons known or reasonably 41 35 expected to have claims against the cemetery, including 42 1 customers who purchased interment rights, by mailing a notice 42 2 to their last known address as indicated by the records of the 42 3 cemetery. 42 4 (2) By publication in a newspaper of general circulation 42 5 in the county in which the cemetery has its principal place of 42 6 business and in other locations as the liquidator deems 42 7 appropriate. 42 8 b. Notice to potential claimants under paragraph "a" shall 42 9 require claimants to file with the liquidator their claims 42 10 together with proper proofs of the claim under subsection 13 42 11 on or before a date the liquidator shall specify in the 42 12 notice. Claimants shall keep the liquidator informed of their 42 13 changes of address, if any. 42 14 c. If notice is given pursuant to this section, the 42 15 distribution of assets of the cemetery under this chapter 42 16 shall be conclusive with respect to claimants, whether or not 42 17 a claimant actually received notice. 42 18 5. ACTIONS BY AND AGAINST LIQUIDATOR. 42 19 a. After the issuance of an order appointing a liquidator 42 20 of a cemetery, an action at law or equity shall not be brought 42 21 against the cemetery in this state or elsewhere, and existing 42 22 actions shall not be maintained or further presented after 42 23 issuance of the order. Whenever in the liquidator's judgment, 42 24 protection of the estate of the cemetery necessitates 42 25 intervention in an action against the cemetery that is pending 42 26 outside this state, the liquidator may intervene in the 42 27 action. The liquidator may defend, at the expense of the 42 28 estate of the cemetery, an action in which the liquidator 42 29 intervenes under this section. 42 30 b. Within two years or such additional time as applicable 42 31 law may permit, the liquidator, after the issuance of an order 42 32 for liquidation, may institute an action or proceeding on 42 33 behalf of the estate of the cemetery upon any cause of action 42 34 against which the period of limitation fixed by applicable law 42 35 has not expired at the time of the filing of the petition upon 43 1 which the order is entered. If a period of limitation is 43 2 fixed by agreement for instituting a suit or proceeding upon a 43 3 claim, or for filing a claim, proof of claim, proof of loss, 43 4 demand, notice, or the like, or if in a proceeding, judicial 43 5 or otherwise, a period of limitation is fixed in the 43 6 proceeding or pursuant to applicable law for taking an action, 43 7 filing a claim or pleading, or doing an act, and if the period 43 8 had not expired at the date of the filing of the petition, the 43 9 liquidator, for the benefit of the estate, may take any action 43 10 or do any act, required of or permitted to the cemetery, 43 11 within a period of one hundred eighty days subsequent to the 43 12 entry of an order for liquidation, or within a further period 43 13 as is shown to the satisfaction of the court not to be 43 14 unfairly prejudicial to the other party. 43 15 c. A statute of limitation or defense of laches shall not 43 16 run with respect to an action against a cemetery between the 43 17 filing of a petition for liquidation against the cemetery and 43 18 the denial of the petition. An action against the cemetery 43 19 that might have been commenced when the petition was filed may 43 20 be commenced for at least sixty days after the petition is 43 21 denied. 43 22 6. COLLECTION AND LIST OF ASSETS. 43 23 a. As soon as practicable after the liquidation order but 43 24 not later than one hundred twenty days after such order, the 43 25 liquidator shall prepare in duplicate a list of the cemetery's 43 26 assets. The list shall be amended or supplemented as the 43 27 liquidator may determine. One copy shall be filed in the 43 28 office of the clerk of court and one copy shall be retained 43 29 for the liquidator's files. Amendments and supplements shall 43 30 be similarly filed. 43 31 b. The liquidator shall reduce the assets to a degree of 43 32 liquidity that is consistent with the effective execution of 43 33 the liquidation. 43 34 c. A submission to the court for distribution of assets in 43 35 accordance with subsection 11 fulfills the requirements of 44 1 paragraph "a". 44 2 7. FRAUDULENT TRANSFERS PRIOR TO PETITION. 44 3 a. A transfer made and an obligation incurred by a 44 4 cemetery within one year prior to the filing of a successful 44 5 petition for liquidation under this chapter is fraudulent as 44 6 to then existing and future creditors if made or incurred 44 7 without fair consideration, or with actual intent to hinder, 44 8 delay, or defraud either existing or future creditors. A 44 9 fraudulent transfer made or an obligation incurred by a 44 10 cemetery ordered to be liquidated under this chapter may be 44 11 avoided by the receiver, except as to a person who in good 44 12 faith is a purchaser, lienor, or obligee for a present fair 44 13 equivalent value. A purchaser, lienor, or obligee, who in 44 14 good faith has given a consideration less than fair for such 44 15 transfer, lien, or obligation, may retain the property, lien, 44 16 or obligation as security for repayment. The court, on due 44 17 notice, may order any such transfer or obligation to be 44 18 preserved for the benefit of the estate, and in that event, 44 19 the receiver shall succeed to and may enforce the rights of 44 20 the purchaser, lienor, or obligee. 44 21 b. (1) A transfer of property other than real property is 44 22 made when it becomes perfected so that a subsequent lien 44 23 obtainable by legal or equitable proceedings on a simple 44 24 contract could not become superior to the rights of the 44 25 transferee under subsection 9, paragraph "c". 44 26 (2) A transfer of real property is made when it becomes 44 27 perfected so that a subsequent bona fide purchaser from the 44 28 cemetery could not obtain rights superior to the rights of the 44 29 transferee. 44 30 (3) A transfer which creates an equitable lien is not 44 31 perfected if there are available means by which a legal lien 44 32 could be created. 44 33 (4) A transfer not perfected prior to the filing of a 44 34 petition for liquidation is deemed to be made immediately 44 35 before the filing of the successful petition. 45 1 (5) This subsection applies whether or not there are or 45 2 were creditors who might have obtained a lien or persons who 45 3 might have become bona fide purchasers. 45 4 8. FRAUDULENT TRANSFER AFTER PETITION. 45 5 a. After a petition for liquidation has been filed a 45 6 transfer of real property of the cemetery made to a person 45 7 acting in good faith is valid against the receiver if made for 45 8 a present fair equivalent value. If the transfer was not made 45 9 for a present fair equivalent value, then the transfer is 45 10 valid to the extent of the present consideration actually paid 45 11 for which amount the transferee shall have a lien on the 45 12 property transferred. The commencement of a proceeding in 45 13 liquidation is constructive notice upon the recording of a 45 14 copy of the petition for or order of liquidation with the 45 15 recorder of deeds in the county where any real property in 45 16 question is located. The exercise by a court of the United 45 17 States or a state or jurisdiction to authorize a judicial sale 45 18 of real property of the cemetery within a county in a state 45 19 shall not be impaired by the pendency of a proceeding unless 45 20 the copy is recorded in the county prior to the consummation 45 21 of the judicial sale. 45 22 b. After a petition for liquidation has been filed and 45 23 before either the receiver takes possession of the property of 45 24 the cemetery or an order of liquidation is granted: 45 25 (1) A transfer of the property, other than real property, 45 26 of the cemetery made to a person acting in good faith is valid 45 27 against the receiver if made for a present fair equivalent 45 28 value. If the transfer was not made for a present fair 45 29 equivalent value, then the transfer is valid to the extent of 45 30 the present consideration actually paid for which amount the 45 31 transferee shall have a lien on the property transferred. 45 32 (2) If acting in good faith, a person indebted to the 45 33 cemetery or holding property of the cemetery may pay the debt 45 34 or deliver the property, or any part of the property, to the 45 35 cemetery or upon the cemetery's order as if the petition were 46 1 not pending. 46 2 (3) A person having actual knowledge of the pending 46 3 liquidation is not acting in good faith. 46 4 (4) A person asserting the validity of a transfer under 46 5 this subsection has the burden of proof. Except as provided 46 6 in this subsection, a transfer by or on behalf of the cemetery 46 7 after the date of the petition for liquidation by any person 46 8 other than the liquidator is not valid against the liquidator. 46 9 c. A person receiving any property from the cemetery or 46 10 any benefit of the property of the cemetery which is a 46 11 fraudulent transfer under paragraph "a" is personally liable 46 12 for the property or benefit and shall account to the 46 13 liquidator. 46 14 d. This chapter does not impair the negotiability of 46 15 currency or negotiable instruments. 46 16 9. VOIDABLE PREFERENCES AND LIENS. 46 17 a. (1) A preference is a transfer of the property of a 46 18 cemetery to or for the benefit of a creditor for an antecedent 46 19 debt made or suffered by the cemetery within one year before 46 20 the filing of a successful petition for liquidation under this 46 21 chapter, the effect of which transfer may be to enable the 46 22 creditor to obtain a greater percentage of this debt than 46 23 another creditor of the same class would receive. If a 46 24 liquidation order is entered while the cemetery is already 46 25 subject to a receivership, then the transfers are preferences 46 26 if made or suffered within one year before the filing of the 46 27 successful petition for the receivership, or within two years 46 28 before the filing of the successful petition for liquidation, 46 29 whichever time is shorter. 46 30 (2) A preference may be avoided by the liquidator if any 46 31 of the following exist: 46 32 (a) The cemetery was insolvent at the time of the 46 33 transfer. 46 34 (b) The transfer was made within four months before the 46 35 filing of the petition. 47 1 (c) At the time the transfer was made, the creditor 47 2 receiving it or to be benefited by the transfer or the 47 3 creditor's agent acting with reference to the transfer had 47 4 reasonable cause to believe that the cemetery was insolvent or 47 5 was about to become insolvent. 47 6 (d) The creditor receiving the transfer was an officer, or 47 7 an employee, attorney, or other person who was in fact in a 47 8 position of comparable influence in the cemetery to an officer 47 9 whether or not the person held the position of an officer, 47 10 owner, or other person, firm, corporation, association, or 47 11 aggregation of persons with whom the cemetery did not deal at 47 12 arm's length. 47 13 (3) Where the preference is voidable, the liquidator may 47 14 recover the property. If the property has been converted, the 47 15 liquidator may recover its value from a person who has 47 16 received or converted the property. However, if a bona fide 47 17 purchaser or lienor has given less than fair equivalent value, 47 18 the purchaser or lienor shall have a lien upon the property to 47 19 the extent of the consideration actually given. Where a 47 20 preference by way of lien or security interest is voidable, 47 21 the court may on due notice order the lien or security 47 22 interest to be preserved for the benefit of the estate, in 47 23 which event the lien or title shall pass to the liquidator. 47 24 b. (1) A transfer of property other than real property is 47 25 made when it becomes perfected so that a subsequent lien 47 26 obtainable by legal or equitable proceedings on a simple 47 27 contract could not become superior to the rights of the 47 28 transferee. 47 29 (2) A transfer of real property is made when it becomes 47 30 perfected so that a subsequent bona fide purchaser from the 47 31 cemetery could not obtain rights superior to the rights of the 47 32 transferee. 47 33 (3) A transfer which creates an equitable lien is not 47 34 perfected if there are available means by which a legal lien 47 35 could be created. 48 1 (4) A transfer not perfected prior to the filing of a 48 2 petition for liquidation is deemed to be made immediately 48 3 before the filing of the successful petition. 48 4 (5) This subsection applies whether or not there are or 48 5 were creditors who might have obtained liens or persons who 48 6 might have become bona fide purchasers. 48 7 c. (1) A lien obtainable by legal or equitable 48 8 proceedings upon a simple contract is one arising in the 48 9 ordinary course of the proceedings upon the entry or docketing 48 10 of a judgment or decree, or upon attachment, garnishment, 48 11 execution, or like process, whether before, upon, or after 48 12 judgment or decree and whether before or upon levy. It does 48 13 not include liens which under applicable law are given a 48 14 special priority over other liens which are prior in time. 48 15 (2) A lien obtainable by legal or equitable proceedings 48 16 could become superior to the rights of a transferee, or a 48 17 purchaser could obtain rights superior to the rights of a 48 18 transferee within the meaning of paragraph "b", if such 48 19 consequences would follow only from the lien or purchase 48 20 itself, or from the lien or purchase followed by a step wholly 48 21 within the control of the respective lienholder or purchaser, 48 22 with or without the aid of ministerial action by public 48 23 officials. However, a lien could not become superior and a 48 24 purchase could not create superior rights for the purpose of 48 25 paragraph "b" through an act subsequent to the obtaining of a 48 26 lien or subsequent to a purchase which requires the agreement 48 27 or concurrence of any third party or which requires further 48 28 judicial action or ruling. 48 29 d. A transfer of property for or on account of a new and 48 30 contemporaneous consideration, which is under paragraph "b" 48 31 made or suffered after the transfer because of delay in 48 32 perfecting it, does not become a transfer for or on account of 48 33 an antecedent debt if any acts required by the applicable law 48 34 to be performed in order to perfect the transfer as against 48 35 liens or a bona fide purchaser's rights are performed within 49 1 twenty-one days or any period expressly allowed by the law, 49 2 whichever is less. A transfer to secure a future loan, if a 49 3 loan is actually made, or a transfer which becomes security 49 4 for a future loan, shall have the same effect as a transfer 49 5 for or on account of a new and contemporaneous consideration. 49 6 e. If a lien voidable under paragraph "a", subparagraph 49 7 (2) has been dissolved by the furnishing of a bond or other 49 8 obligation, the surety on which has been indemnified directly 49 9 or indirectly by the transfer or the creation of a lien upon 49 10 property of a cemetery before the filing of a petition under 49 11 this chapter which results in a liquidation order, the 49 12 indemnifying transfer or lien is also voidable. 49 13 f. The property affected by a lien voidable under 49 14 paragraphs "a" and "e" is discharged from the lien. The 49 15 property and any of the indemnifying property transferred to 49 16 or for the benefit of a surety shall pass to the liquidator. 49 17 However, the court may on due notice order a lien to be 49 18 preserved for the benefit of the estate and the court may 49 19 direct that the conveyance be executed to evidence the title 49 20 of the liquidator. 49 21 g. The court shall have summary jurisdiction of a 49 22 proceeding by the liquidator to hear and determine the rights 49 23 of the parties under this section. Reasonable notice of 49 24 hearing in the proceeding shall be given to all parties in 49 25 interest, including the obligee of a releasing bond or other 49 26 like obligation. Where an order is entered for the recovery 49 27 of indemnifying property in kind or for the avoidance of an 49 28 indemnifying lien, upon application of any party in interest, 49 29 the court shall in the same proceeding ascertain the value of 49 30 the property or lien. If the value is less than the amount 49 31 for which the property is indemnified or less than the amount 49 32 of the lien, the transferee or lienholder may elect to retain 49 33 the property or lien upon payment of its value, as ascertained 49 34 by the court, to the liquidator within the time as fixed by 49 35 the court. 50 1 h. The liability of a surety under a releasing bond or 50 2 other like obligation is discharged to the extent of the value 50 3 of the indemnifying property recovered or the indemnifying 50 4 lien nullified and avoided by the liquidator. Where the 50 5 property is retained under paragraph "g", the liability of the 50 6 surety is discharged to the extent of the amount paid to the 50 7 liquidator. 50 8 i. If a creditor has been preferred for property which 50 9 becomes a part of the cemetery's estate, and afterward in good 50 10 faith gives the cemetery further credit without security of 50 11 any kind, the amount of the new credit remaining unpaid at the 50 12 time of the petition may be set off against the preference 50 13 which would otherwise be recoverable from the creditor. 50 14 j. If within four months before the filing of a successful 50 15 petition for liquidation under this chapter, or at any time in 50 16 contemplation of a proceeding to liquidate, a cemetery, 50 17 directly or indirectly, pays money or transfers property to an 50 18 attorney for services rendered or to be rendered, the 50 19 transaction may be examined by the court on its own motion or 50 20 shall be examined by the court on petition of the liquidator. 50 21 The payment or transfer shall be held valid only to the extent 50 22 of a reasonable amount to be determined by the court. The 50 23 excess may be recovered by the liquidator for the benefit of 50 24 the estate. However, where the attorney is in a position of 50 25 influence in the cemetery or an affiliate, payment of any 50 26 money or the transfer of any property to the attorney for 50 27 services rendered or to be rendered is governed by the 50 28 provision of paragraph "a", subparagraph (2), subparagraph 50 29 subdivision (d). 50 30 k. (1) An officer, manager, employee, shareholder, 50 31 subscriber, attorney, or any other person acting on behalf of 50 32 the cemetery who knowingly participates in giving any 50 33 preference when the person has reasonable cause to believe the 50 34 cemetery is or is about to become insolvent at the time of the 50 35 preference is personally liable to the liquidator for the 51 1 amount of the preference. There is an inference that 51 2 reasonable cause exists if the transfer was made within four 51 3 months before the date of filing of this successful petition 51 4 for liquidation. 51 5 (2) A person receiving property from the cemetery or the 51 6 benefit of the property of the cemetery as a preference 51 7 voidable under paragraph "a" is personally liable for the 51 8 property and shall account to the liquidator. 51 9 (3) This subsection shall not prejudice any other claim by 51 10 the liquidator against any person. 51 11 10. CLAIMS OF HOLDER OF VOID OR VOIDABLE RIGHTS. 51 12 a. A claim of a creditor who has received or acquired a 51 13 preference, lien, conveyance, transfer, assignment, or 51 14 encumbrance, voidable under this chapter shall not be allowed 51 15 unless the creditor surrenders the preference, lien, 51 16 conveyance, transfer, assignment, or encumbrance. If the 51 17 avoidance is effected by a proceeding in which a final 51 18 judgment has been entered, the claim shall not be allowed 51 19 unless the money is paid or the property is delivered to the 51 20 liquidator within thirty days from the date of the entering of 51 21 the final judgment. However, the court having jurisdiction 51 22 over the liquidation may allow further time if there is an 51 23 appeal or other continuation of the proceeding. 51 24 b. A claim allowable under paragraph "a" by reason of a 51 25 voluntary or involuntary avoidance, preference, lien, 51 26 conveyance, transfer, assignment, or encumbrance may be filed 51 27 as an excused late filing under subsection 12, if filed within 51 28 thirty days from the date of the avoidance or within the 51 29 further time allowed by the court under paragraph "a". 51 30 11. LIQUIDATOR'S PROPOSAL TO DISTRIBUTE ASSETS. 51 31 a. From time to time as assets become available, the 51 32 liquidator shall make application to the court for approval of 51 33 a proposal to disburse assets out of marshaled assets. 51 34 b. The proposal shall at least include provisions for all 51 35 of the following: 52 1 (1) Reserving amounts for the payment of all the 52 2 following: 52 3 (a) Expenses of administration. 52 4 (b) To the extent of the value of the security held, the 52 5 payment of claims of secured creditors. 52 6 (c) Claims falling within the priorities established in 52 7 subsection 18, paragraphs "a" and "b". 52 8 (2) Disbursement of the assets marshaled to date and 52 9 subsequent disbursement of assets as they become available. 52 10 c. Action on the application may be taken by the court 52 11 provided that the liquidator's proposal complies with 52 12 paragraph "b". 52 13 12. FILING OF CLAIMS. 52 14 a. Proof of all claims shall be filed with the liquidator 52 15 in the form required by subsection 13 on or before the last 52 16 day for filing specified in the notice required under 52 17 subsection 4. 52 18 b. The liquidator may permit a claimant making a late 52 19 filing to share in distributions, whether past or future, as 52 20 if the claimant were not late, to the extent that the payment 52 21 will not prejudice the orderly administration of the 52 22 liquidation under any of the following circumstances: 52 23 (1) The existence of the claim was not known to the 52 24 claimant and that the claimant filed the claim as promptly as 52 25 reasonably possible after learning of it. 52 26 (2) A transfer to a creditor was avoided under subsections 52 27 7 through 9, or was voluntarily surrendered under subsection 52 28 10, and that the filing satisfies the conditions of subsection 52 29 10. 52 30 (3) The valuation under subsection 17 of security held by 52 31 a secured creditor shows a deficiency, which is filed within 52 32 thirty days after the valuation. 52 33 c. The liquidator may consider any claim filed late and 52 34 permit the claimant to receive distributions which are 52 35 subsequently declared on any claims of the same or lower 53 1 priority if the payment does not prejudice the orderly 53 2 administration of the liquidation. The late-filing claimant 53 3 shall receive at each distribution the same percentage of the 53 4 amount allowed on the claim as is then being paid to claimants 53 5 of any lower priority. This shall continue until the claim 53 6 has been paid in full. 53 7 13. PROOF OF CLAIM. 53 8 a. Proof of claim shall consist of a statement signed by 53 9 the claimant that includes all of the following that are 53 10 applicable: 53 11 (1) The particulars of the claim including the 53 12 consideration given for it. 53 13 (2) The identity and amount of the security on the claim. 53 14 (3) The payments, if any, made on the debt. 53 15 (4) A statement that the sum claimed is justly owing and 53 16 that there is no setoff, counterclaim, or defense to the 53 17 claim. 53 18 (5) Any right of priority of payment or other specific 53 19 right asserted by the claimant. 53 20 (6) A copy of the written instrument which is the 53 21 foundation of the claim. 53 22 (7) The name and address of the claimant and the attorney 53 23 who represents the claimant, if any. 53 24 b. A claim need not be considered or allowed if it does 53 25 not contain all the information identified in paragraph "a" 53 26 which is applicable. The liquidator may require that a 53 27 prescribed form be used and may require that other information 53 28 and documents be included. 53 29 c. At any time the liquidator may request the claimant to 53 30 present information or evidence supplementary to that required 53 31 under paragraph "a" and may take testimony under oath, require 53 32 production of affidavits or depositions, or otherwise obtain 53 33 additional information or evidence. 53 34 d. A judgment or order against a cemetery entered after 53 35 the date of filing of a successful petition for liquidation, 54 1 or a judgment or order against the cemetery entered at any 54 2 time by default or by collusion need not be considered as 54 3 evidence of liability or of the amount of damages. A judgment 54 4 or order against a cemetery before the filing of the petition 54 5 need not be considered as evidence of liability or of the 54 6 amount of damages. 54 7 14. SPECIAL CLAIMS. 54 8 a. A claim may be allowed even if contingent, if it is 54 9 filed pursuant to subsection 12. The claim may be allowed and 54 10 the claimant may participate in all distributions declared 54 11 after it is filed to the extent that it does not prejudice the 54 12 orderly administration of the liquidation. 54 13 b. Claims that are due except for the passage of time 54 14 shall be treated as absolute claims are treated. However, the 54 15 claims may be discounted at the legal rate of interest. 54 16 c. Claims made under employment contracts by directors, 54 17 principal officers, or persons in fact performing similar 54 18 functions or having similar powers are limited to payment for 54 19 services rendered prior to the issuance of an order of 54 20 liquidation under subsection 2. 54 21 15. DISPUTED CLAIMS. 54 22 a. If a claim is denied in whole or in part by the 54 23 liquidator, written notice of the determination shall be given 54 24 to the claimant or the claimant's attorney by first class mail 54 25 at the address shown in the proof of claim. Within sixty days 54 26 from the mailing of the notice, the claimant may file 54 27 objections with the liquidator. Unless a filing is made, the 54 28 claimant shall not further object to the determination. 54 29 b. If objections are filed with the liquidator and the 54 30 liquidator does not alter the denial of the claim as a result 54 31 of the objections, the liquidator shall ask the court for a 54 32 hearing as soon as practicable and give notice of the hearing 54 33 by first class mail to the claimant or the claimant's attorney 54 34 and to any other persons directly affected. The notice shall 54 35 be given not less than ten nor more than thirty days before 55 1 the date of the hearing. The matter shall be heard by the 55 2 court or by a court-appointed referee. The referee shall 55 3 submit findings of fact along with a recommendation. 55 4 16. CLAIMS OF OTHER PERSON. If a creditor, whose claim 55 5 against a cemetery is secured in whole or in part by the 55 6 undertaking of another person, fails to prove and file that 55 7 claim, then the other person may do so in the creditor's name 55 8 and shall be subrogated to the rights of the creditor, whether 55 9 the claim has been filed by the creditor or by the other 55 10 person in the creditor's name to the extent that the other 55 11 person discharges the undertaking. However, in the absence of 55 12 an agreement with the creditor to the contrary, the other 55 13 person is not entitled to any distribution until the amount 55 14 paid to the creditor on the undertaking plus the distributions 55 15 paid on the claim from the cemetery's estate to the creditor 55 16 equal the amount of the entire claim of the creditor. An 55 17 excess received by the creditor shall be held by the creditor 55 18 in trust for the other person. 55 19 17. SECURED CREDITOR'S CLAIMS. 55 20 a. The value of security held by a secured creditor shall 55 21 be determined in one of the following ways, as the court may 55 22 direct: 55 23 (1) By converting the security into money according to the 55 24 terms of the agreement pursuant to which the security was 55 25 delivered to the creditors. 55 26 (2) By agreement, arbitration, compromise, or litigation 55 27 between the creditor and the liquidator. 55 28 b. The determination shall be under the supervision and 55 29 control of the court with due regard for the recommendation of 55 30 the liquidator. The amount determined shall be credited upon 55 31 the secured claim. A deficiency shall be treated as an 55 32 unsecured claim. If the claimant surrenders the security to 55 33 the liquidator, the entire claim shall be allowed as if 55 34 unsecured. 55 35 18. PRIORITY OF DISTRIBUTION. 56 1 The priority of distribution of claims from the cemetery's 56 2 estate shall be in accordance with the order in which each 56 3 class of claims is set forth. Claims in each class shall be 56 4 paid in full or adequate funds retained for the payment before 56 5 the members of the next class receive any payment. Subclasses 56 6 shall not be established within a class. The order of 56 7 distribution of claims is as follows: 56 8 a. CLASS 1. The costs and expenses of administration, 56 9 including but not limited to the following: 56 10 (1) The actual and necessary costs of preserving or 56 11 recovering the assets of the cemetery. 56 12 (2) Compensation for all authorized services rendered in 56 13 the liquidation. 56 14 (3) Necessary filing fees. 56 15 (4) The fees and mileage payable to witnesses. 56 16 (5) Authorized reasonable attorney's fees and other 56 17 professional services rendered in the liquidation. 56 18 b. CLASS 2. Reasonable compensation to employees for 56 19 services performed to the extent that they do not exceed two 56 20 months of monetary compensation and represent payment for 56 21 services performed within one year before the filing of the 56 22 petition for liquidation. Officers and directors are not 56 23 entitled to the benefit of this priority. The priority is in 56 24 lieu of other similar priority which may be authorized by law 56 25 as to wages or compensation of employees. 56 26 c. CLASS 3. Claims under interment rights contracts. 56 27 d. CLASS 4. Claims of general creditors. 56 28 e. CLASS 5. Claims of the federal or any state or local 56 29 government. Claims, including those of a governmental body 56 30 for a penalty or forfeiture, are allowed in this class only to 56 31 the extent of the pecuniary loss sustained from the act, 56 32 transaction, or proceeding out of which the penalty or 56 33 forfeiture arose, with reasonable and actual costs incurred. 56 34 The remainder of such claims shall be postponed to the class 56 35 of claims under paragraph "g". 57 1 f. CLASS 6. Claims filed late or any other claims other 57 2 than claims under paragraph "g". 57 3 g. CLASS 7. The claims of shareholders or other owners. 57 4 19. LIQUIDATOR'S RECOMMENDATIONS TO THE COURT. 57 5 a. The liquidator shall review claims duly filed in the 57 6 liquidation and shall make further investigation as necessary. 57 7 The liquidator may compound, compromise or in any other manner 57 8 negotiate the amount for which claims will be recommended to 57 9 the court except where the liquidator is required by law to 57 10 accept claims as settled by a person or organization. 57 11 Unresolved disputes shall be determined under subsection 15. 57 12 As soon as practicable, the liquidator shall present to the 57 13 court a report of the claims against the cemetery with the 57 14 liquidator's recommendations. The report shall include the 57 15 name and address of each claimant and the amount of the claim 57 16 finally recommended. 57 17 b. The court may approve, disapprove, or modify the report 57 18 on claims by the liquidator. Reports not modified by the 57 19 court within sixty days following submission by the liquidator 57 20 shall be treated by the liquidator as allowed claims, subject 57 21 to later modification or to rulings made by the court pursuant 57 22 to subsection 15. A claim under a policy of insurance shall 57 23 not be allowed for an amount in excess of the applicable 57 24 policy limits. 57 25 20. DISTRIBUTION OF ASSETS. Under the direction of the 57 26 court, the liquidator shall pay distributions in a manner that 57 27 will assure the proper recognition of priorities and a 57 28 reasonable balance between the expeditious completion of the 57 29 liquidation and the protection of unliquidated and 57 30 undetermined claims, including third-party claims. 57 31 Distribution of assets in kind may be made at valuations set 57 32 by agreement between the liquidator and the creditor and 57 33 approved by the court. 57 34 21. UNCLAIMED AND WITHHELD FUNDS. 57 35 a. Unclaimed funds subject to distribution remaining in 58 1 the liquidator's hands when the liquidator is ready to apply 58 2 to the court for discharge, including the amount distributable 58 3 to a creditor, owner, or other person who is unknown or cannot 58 4 be found, shall be deposited with the treasurer of state, and 58 5 shall be paid without interest, except as provided in 58 6 subsection 18, to the person entitled or the person's legal 58 7 representative upon proof satisfactory to the treasurer of 58 8 state of the right to the funds. An amount on deposit not 58 9 claimed within six years from the discharge of the liquidator 58 10 is deemed to have been abandoned and shall become the property 58 11 of the state without formal escheat proceedings and be 58 12 transferred to the insurance division regulatory fund. 58 13 b. Funds withheld under subsection 14 and not distributed 58 14 shall upon discharge of the liquidator be deposited with the 58 15 treasurer of state and paid pursuant to subsection 18. Sums 58 16 remaining which under subsection 18 would revert to the 58 17 undistributed assets of the cemetery shall be transferred to 58 18 the insurance division regulatory fund and become the property 58 19 of the state as provided under paragraph "a", unless the 58 20 commissioner in the commissioner's discretion petitions the 58 21 court to reopen the liquidation pursuant to subsection 23. 58 22 c. Notwithstanding any other provision of this chapter, 58 23 funds as identified in paragraph "a", with the approval of the 58 24 court, shall be made available to the commissioner for use in 58 25 the detection and prevention of future insolvencies. The 58 26 commissioner shall hold these funds in the insurance division 58 27 regulatory fund and shall pay without interest, except as 58 28 provided in subsection 18, to the person entitled to the funds 58 29 or the person's legal representative upon proof satisfactory 58 30 to the commissioner of the person's right to the funds. The 58 31 funds shall be held by the commissioner for a period of two 58 32 years at which time the rights and duties to the unclaimed 58 33 funds shall vest in the commissioner. 58 34 22. TERMINATION OF PROCEEDINGS. 58 35 a. When all assets justifying the expense of collection 59 1 and distribution have been collected and distributed under 59 2 this chapter, the liquidator shall apply to the court for 59 3 discharge. The court may grant the discharge and make any 59 4 other orders, including an order to transfer remaining funds 59 5 that are uneconomical to distribute, as appropriate. 59 6 b. Any other person may apply to the court at any time for 59 7 an order under paragraph "a". If the application is denied, 59 8 the applicant shall pay the costs and expenses of the 59 9 liquidator in resisting the application, including a 59 10 reasonable attorney's fee. 59 11 23. REOPENING LIQUIDATION. At any time after the 59 12 liquidation proceeding has been terminated and the liquidator 59 13 discharged, the commissioner or other interested party may 59 14 petition the court to reopen the proceedings for good cause 59 15 including the discovery of additional assets. The court shall 59 16 order the proceeding reopened if it is satisfied that there is 59 17 justification for the reopening. 59 18 24. DISPOSITION OF RECORDS DURING AND AFTER TERMINATION OF 59 19 LIQUIDATION. If it appears to the commissioner that the 59 20 records of a cemetery in process of liquidation or completely 59 21 liquidated are no longer useful, the commissioner may 59 22 recommend to the court and the court shall direct what records 59 23 shall be retained for future reference and what records shall 59 24 be destroyed. 59 25 25. EXTERNAL AUDIT OF RECEIVER'S BOOKS. The court may 59 26 order audits to be made of the books of the commissioner 59 27 relating to a receivership established under this chapter, and 59 28 a report of each audit shall be filed with the commissioner 59 29 and with the court. The books, records, and other documents 59 30 of the receivership shall be made available to the auditor at 59 31 any time without notice. The expense of an audit shall be 59 32 considered a cost of administration of the receivership. 59 33 26. TRANSFER TO GOVERNMENTAL SUBDIVISION. If the 59 34 liquidator is unable to sell the cemetery after one year, the 59 35 liquidator may vest title in an appropriate governmental 60 1 subdivision. The perpetual care guarantee fund, together with 60 2 all investments then outstanding, and all books, records, and 60 3 papers of the cemetery shall be transferred to the treasurer 60 4 of the governmental subdivision. The principal and interest 60 5 of the fund shall be used exclusively for the care and 60 6 maintenance of the cemetery. 60 7 Sec. 18. NEW SECTION. 523J.6 POWERS AND DUTIES OF 60 8 PERPETUAL CARE CEMETERIES. 60 9 1. Within the boundaries of the cemetery lands that the 60 10 cemetery owns, a cemetery may perform the following functions: 60 11 a. The exclusive care and maintenance of the cemetery. 60 12 b. The exclusive interment, entombment, or inurnment of 60 13 human remains, including the exclusive right to open, prepare 60 14 for interment, and close all ground, mausoleum, and urn 60 15 burials. Each preneed contract for burial rights or services 60 16 shall disclose, pursuant to the cemetery's bylaws, rules, and 60 17 regulations, whether opening and closing of the burial space 60 18 is included in the contract, and, if not, the current prices 60 19 for opening and closing and a statement that these prices are 60 20 subject to change. Each cemetery which sells preneed 60 21 contracts must offer opening and closing as part of a preneed 60 22 contract. 60 23 c. The exclusive initial preneed and at-need sale of 60 24 interment or burial rights in earth, mausoleum, crypt, niche, 60 25 or columbarium interment. However, this chapter does not 60 26 limit the right of a person owning interment or burial rights 60 27 to sell those rights to third parties subject to transfer of 60 28 title by the cemetery. 60 29 d. The adoption of bylaws regulating the activities 60 30 conducted within the cemetery's boundaries, provided that a 60 31 licensed funeral director shall not be denied access by any 60 32 cemetery to conduct a funeral for or supervise a disinterment 60 33 of human remains. The cemetery shall not approve any bylaw 60 34 which unreasonably restricts competition, or which 60 35 unreasonably increases the cost to the owner of interment or 61 1 burial rights in utilizing these rights. 61 2 e. The nonexclusive preneed and at-need sale of monuments, 61 3 memorials, markers, burial vaults, urns, flower vases, floral 61 4 arrangements, and other similar merchandise for use within the 61 5 cemetery. 61 6 f. The entry into sales or management contracts with other 61 7 persons. The cemetery shall be responsible for the deposit of 61 8 all moneys required to be placed in a trust fund. 61 9 2. A full disclosure shall be made of all fees required 61 10 for interment, entombment, or inurnment of human remains. 61 11 3. A cemetery may adopt bylaws establishing minimum 61 12 standards for burial merchandise or the installation of such 61 13 merchandise. 61 14 Sec. 19. NEW SECTION. 523J.7 INVESTIGATIONS. 61 15 The commissioner or the attorney general, for the purpose 61 16 of discovering violations of this chapter, may do any of the 61 17 following: 61 18 1. Investigate the cemetery and examine records as 61 19 necessary to verify compliance with this chapter. 61 20 2. Administer oaths and affirmations, subpoena witnesses, 61 21 receive evidence, and require the production of documents and 61 22 records in connection with an investigation or proceeding 61 23 being conducted pursuant to this chapter. 61 24 3. Apply to the district court for issuance of an order 61 25 requiring a person's appearance before the commissioner or 61 26 attorney general, or a designee of either or both, in cases 61 27 where the person has refused to obey a subpoena issued by the 61 28 commissioner or attorney general. The person may also be 61 29 required to produce documentary evidence germane to the 61 30 subject of the investigation. Failure to obey a court order 61 31 under this subsection constitutes contempt of court. 61 32 Sec. 20. Section 566A.1, subsection 1, Code 1995, is 61 33 amended to read as follows: 61 34 1. A corporation or other form of organization engaging in 61 35 the business of the ownership, maintenance, or operation of a 62 1 cemetery, which provides lots or other interment space for the 62 2 remains of human bodies is subject to this chapter. However, 62 3 achurch,religiousorganization, or established fraternal62 4societycemetery is subject only to subsection 2of this62 5section, and sections 566A.2A, 566A.2B, and 566A.2C. 62 6 Political subdivisions of the state are exempt fromthis62 7chaptersections 566A.3 and 566A.6. 62 8 Sec. 21. NEW SECTION. 566A.1A DEFINITIONS. 62 9 As used in this chapter, unless the context otherwise 62 10 requires: 62 11 1. "Agent" means a person authorized by a cemetery or a 62 12 cemetery operator to represent the cemetery in dealing with 62 13 the public. 62 14 2. "Cemetery" means a cemetery, mausoleum, columbarium, or 62 15 other space held for the purpose of burial, entombment, or 62 16 inurnment of human remains and where such space is offered for 62 17 sale to the public. 62 18 3. "Cemetery operator" means a person who owns, controls, 62 19 operates, or manages a cemetery, who is responsible for the 62 20 cemetery's care and maintenance, and who controls the opening 62 21 and closing of all graves, crypts, and niches. 62 22 4. "Columbarium" means a structure or room or other space 62 23 in a building or structure used or intended to be used for the 62 24 inurnment or deposit of cremated human remains. 62 25 5. "Commissioner" means the commissioner of insurance or 62 26 the deputy appointed under section 502.601. 62 27 6. "Deed" means the assignment or conveyance of interment 62 28 rights. 62 29 7. "Grave" means a piece of land that is used or intended 62 30 to be used for the underground burial of human remains, other 62 31 than an underground mausoleum or columbarium space. 62 32 8. "Human remains" means the body of a deceased individual 62 33 that is in any stage of decomposition or has been cremated. 62 34 9. "Interment" means the disposition of human remains by 62 35 earth burial, entombment, or inurnment. 63 1 10. "Interment rights" means a right of use conveyed by 63 2 contract or property ownership to inter human remains in a 63 3 columbarium, grave, mausoleum, lawn crypt, or undeveloped 63 4 space. 63 5 11. "Lawn crypt" means an outer enclosure, for a casket or 63 6 similar inner burial container which is permanently installed 63 7 below ground prior to the time of actual interment. A lawn 63 8 crypt may permit single or multiple interments in a grave 63 9 space. 63 10 12. "Mausoleum" means a building, structure, or part of a 63 11 building or structure that is used or intended to be used for 63 12 the entombment of human remains. 63 13 13. "Mausoleum space" means a niche, crypt, or specific 63 14 place in a mausoleum that contains or is intended to contain 63 15 human remains. 63 16 14. "Niche" means a recess in the wall of a mausoleum or 63 17 columbarium for the deposit of human remains. 63 18 15. "Perpetual care" means maintenance, repair, and care 63 19 of all interment spaces, features, buildings, roadways, 63 20 parking lots, water supply, and other existing cemetery 63 21 structures subject to the provisions of section 566A.3 and 63 22 includes the general overhead expenses needed to accomplish 63 23 such maintenance, repair, and care. 63 24 16. "Perpetual care cemetery" means a cemetery which has 63 25 established a perpetual care fund for the maintenance, repair, 63 26 and care of all interment spaces subject to perpetual care 63 27 within the cemetery in compliance with section 566A.3. 63 28 17. "Religious cemetery" means a cemetery that is owned, 63 29 operated, or controlled by a recognized church, religious 63 30 society, association, or denomination. 63 31 18. "Sale" means a transfer for consideration of any 63 32 interest in ownership, title, or right of use. 63 33 19. "Undeveloped space" means a mausoleum, columbarium 63 34 space, or lawn crypt that is not ready for the burial of human 63 35 remains on the date of the sale of the space. 64 1 Sec. 22. NEW SECTION. 566A.2A PERPETUAL CARE CEMETERY 64 2 REGISTRY. 64 3 A perpetual care cemetery shall maintain a registry of 64 4 individuals who have purchased items subject to the perpetual 64 5 care requirements of this chapter including the amount 64 6 deposited in trust for each individual. The registry shall 64 7 include all transactions entered into on or after July 1, 64 8 1995. 64 9 Sec. 23. NEW SECTION. 566A.2B INTERMENT RIGHTS AGREEMENT 64 10 &endash; REQUIREMENTS &endash; CONTENTS. 64 11 1. An agreement for interment rights under this chapter 64 12 must be written in clear, understandable language and do all 64 13 of the following: 64 14 a. Identify the seller and purchaser. 64 15 b. Identify the salesperson. 64 16 c. Specify the interment rights to be provided and the 64 17 cost of each item. 64 18 d. State clearly the conditions on which substitution will 64 19 be allowed. 64 20 e. Set forth the total purchase price and the terms under 64 21 which it is to be paid. 64 22 f. State clearly whether the agreement is a revocable or 64 23 irrevocable contract, and, if revocable, which parties have 64 24 the authority to revoke the agreement. 64 25 g. State the amount or percentage of money to be placed in 64 26 the cemetery's perpetual care and maintenance guarantee fund. 64 27 h. Set forth an explanation that the perpetual care and 64 28 maintenance guarantee fund is an irrevocable trust, that 64 29 deposits cannot be withdrawn even in the event of 64 30 cancellation, and that the trust's income shall be used by the 64 31 cemetery for its maintenance, repair, and care. 64 32 i. Set forth an explanation of any fees or expenses that 64 33 may be charged. 64 34 j. Set forth an explanation of whether amounts for 64 35 perpetual care will be deposited in trust upon payment in full 65 1 or on an allocable basis as payments are made. 65 2 k. Set forth an explanation of whether initial payments on 65 3 agreements for multiple items of funeral and cemetery 65 4 merchandise or services, or both, will be allocated first to 65 5 the purchase of a grave, niche, columbarium space, or 65 6 mausoleum space. If such an allocation is to be made, the 65 7 agreement shall provide for the immediate transfer of such 65 8 interment rights upon payment in full and prominently state 65 9 that any applicable trust deposits under chapters 523A and 65 10 523E will not be made until the cemetery has received payment 65 11 in full for the interment rights. The transfer of an 65 12 undeveloped space may be deferred until such space is ready 65 13 for burial. 65 14 l. If the transfer of an undeveloped space will be 65 15 deferred until the space is ready for burial as permitted in 65 16 paragraph "k", the agreement shall provide for some form of 65 17 written acknowledgment upon payment in full, specify a 65 18 reasonable time period for development of the space, describe 65 19 what happens in the event of a death prior to development of 65 20 the space, and provide for the immediate transfer of the 65 21 interment rights when development of the space is complete. 65 22 m. Specify the purchaser's right to cancel and the damages 65 23 payable for cancellation, if any. 65 24 n. State the name and address of the commissioner. 65 25 Sec. 24. NEW SECTION. 566A.2C ANNUAL REPORT BY RELIGIOUS 65 26 CEMETERIES. 65 27 1. A religious cemetery shall file a written report with 65 28 the insurance division annually within four months following 65 29 the end of the cemetery's fiscal year. The report shall 65 30 include all of the following: 65 31 a. The name and address of the cemetery. 65 32 b. An affidavit that the cemetery is a religious cemetery. 65 33 c. Copies of all sales agreement forms used by the 65 34 cemetery. 65 35 2. The commissioner shall permit the filing of a unified 66 1 annual report in the event of commonly owned or affiliated 66 2 cemeteries. A religious organization may commingle perpetual 66 3 care funds for purposes of investment and administration and 66 4 may file a single report by diocese or similar region, if each 66 5 cemetery is appropriately identified and separate records are 66 6 maintained for each cemetery. 66 7 3. The report shall be made under oath and shall be 66 8 accompanied by a filing fee of one hundred dollars. The fee 66 9 shall be waived for a cemetery with less than two thousand 66 10 five hundred dollars average annual retail sales for the 66 11 previous three calendar years. 66 12 4. Notwithstanding chapter 22, all records maintained by 66 13 the commissioner under this section are confidential and shall 66 14 not be made available for inspection or copying except upon 66 15 the approval of the commissioner or attorney general. 66 16 Sec. 25. NEW SECTION. 566A.2D ANNUAL REPORT BY 66 17 NONPERPETUAL CARE CEMETERIES. 66 18 1. A nonperpetual care cemetery shall file a written 66 19 report with the insurance division within four months 66 20 following the end of the cemetery's fiscal year. The report 66 21 shall include all of the following: 66 22 a. The name and address of the cemetery. 66 23 b. An affidavit that the cemetery is a nonperpetual care 66 24 cemetery in compliance with section 566A.5. 66 25 c. Copies of all sales agreement forms used by the 66 26 cemetery. 66 27 2. The commissioner shall permit the filing of a unified 66 28 annual report in the event of commonly owned or affiliated 66 29 cemeteries. A political subdivision may commingle perpetual 66 30 care funds for purposes of investment and administration and 66 31 may file a single report, if each cemetery is appropriately 66 32 identified and separate records are maintained for each 66 33 cemetery. 66 34 3. The report shall be made under oath and shall be 66 35 accompanied by a filing fee of one hundred dollars for a 67 1 cemetery with average retail sales equal to or greater than 67 2 two thousand five hundred dollars for the previous three 67 3 calendar years. The fee shall be waived for a cemetery with 67 4 less than two thousand five hundred dollars average annual 67 5 retail sales for the previous three calendar years. 67 6 4. Notwithstanding chapter 22, all records maintained by 67 7 the commissioner under this section are confidential and shall 67 8 not be made available for inspection or copying except upon 67 9 the approval of the commissioner or attorney general. 67 10 Sec. 26. NEW SECTION. 566A.2E ANNUAL REPORT BY PERPETUAL 67 11 CARE CEMETERIES. 67 12 1. A perpetual care cemetery shall file a written report 67 13 as of the end of each fiscal year of the cemetery including 67 14 the following: 67 15 a. The name and address of the cemetery. 67 16 b. The name and address of any trustee holding perpetual 67 17 care and maintenance guarantee fund moneys. 67 18 c. The name and address of any depository holding 67 19 perpetual care and maintenance guarantee fund moneys. 67 20 d. An affidavit that the cemetery is a perpetual care 67 21 cemetery in compliance with section 566A.3. 67 22 e. Copies of all sales agreement forms used by the 67 23 cemetery. 67 24 f. The amount of the principal of the cemetery's perpetual 67 25 care funds at the end of the fiscal year. 67 26 g. The number of interments made and the number of deeds 67 27 issued during the cemetery's preceding fiscal year. 67 28 2. The report shall be filed with the insurance division 67 29 within four months following the end of the cemetery's fiscal 67 30 year in the form required by the commissioner. 67 31 3. The commissioner shall permit the filing of a unified 67 32 annual report in the event of commonly owned or affiliated 67 33 cemeteries. A political subdivision may commingle perpetual 67 34 care funds for purposes of investment and administration and 67 35 may file a single report, if each cemetery is appropriately 68 1 identified and separate records are maintained for each 68 2 cemetery. 68 3 4. The commissioner shall establish by rule an audit fee 68 4 to be filed with the annual report. The audit report fee 68 5 shall be based on the number of deeds issued by the cemetery 68 6 during the reporting period. The audit fee shall apply only 68 7 to perpetual care cemeteries and shall be based on the 68 8 approximate cost of regulation. 68 9 5. Notwithstanding chapter 22, all records maintained by 68 10 the commissioner under this subsection are confidential and 68 11 shall not be made available for inspection or copying except 68 12 upon approval of the commissioner or attorney general. 68 13 Sec. 27. Section 566A.3, Code 1995, is amended by adding 68 14 the following new unnumbered paragraph: 68 15 NEW UNNUMBERED PARAGRAPH. A perpetual care cemetery may 68 16 require a contribution to the cemetery's perpetual care 68 17 guarantee fund for each grave marker, tombstone, monument, or 68 18 item of ornamental merchandise installed in the cemetery from 68 19 the purchaser of such merchandise. A cemetery may establish a 68 20 separate perpetual care fund for this purpose. The 68 21 contribution, if required by the cemetery, shall be uniformly 68 22 charged on every installation and shall be set aside and 68 23 deposited in the perpetual care trust fund. The contributions 68 24 shall be nonrefundable and shall not be withdrawn from the 68 25 trust fund once deposited. 68 26 Sec. 28. Section 566A.5, Code 1995, is amended by striking 68 27 the section and inserting in lieu thereof the following: 68 28 566A.5 NONPERPETUAL CARE CEMETERIES. 68 29 1. All other organizations subject to the provisions of 68 30 this chapter shall be nonperpetual care cemeteries. 68 31 2. Each nonperpetual care cemetery shall post a legible 68 32 sign in a conspicuous place in the office or offices where 68 33 sales are conducted, and at or near the entrance of the 68 34 cemetery or its administration building and readily accessible 68 35 to the public stating: "This is a nonperpetual care 69 1 cemetery". The lettering of these signs shall be of a size 69 2 and style as approved by the commissioner by rule or order so 69 3 that the signs can be read at a reasonable distance. 69 4 3. Each nonperpetual care cemetery shall also have printed 69 5 or stamped at the head of all of its contracts, deeds, 69 6 statements, letterheads, and advertising material, the legend: 69 7 "This is a nonperpetual care cemetery", and shall not sell any 69 8 lot or interment space in the cemetery unless the purchaser of 69 9 the lot or interment space is informed that the cemetery is a 69 10 nonperpetual care cemetery. 69 11 4. A nonperpetual care cemetery or cemetery operator or 69 12 employee or agent of a nonperpetual care cemetery shall not 69 13 advertise or represent that the cemetery is a perpetual care 69 14 cemetery or use any similar title, description, or term 69 15 indicating that the cemetery provides guaranteed or permanent 69 16 maintenance and care or that the cemetery has a trust fund or 69 17 endowment fund to pay for the expenses of such care. 69 18 Sec. 29. Section 566A.12, Code 1995, is amended by 69 19 striking the section and inserting in lieu thereof the 69 20 following: 69 21 566A.12 ANNUAL REPORTS AND ADMINISTRATION. 69 22 1. CEMETERY REGISTRY. The commissioner shall establish 69 23 and maintain a public registry of cemeteries that indicates 69 24 whether a cemetery is a perpetual care cemetery or a 69 25 nonperpetual care cemetery. 69 26 2. INVESTIGATIONS AND AUDITS. The commissioner or the 69 27 attorney general, for the purpose of discovering violations of 69 28 this chapter or rules adopted pursuant to this chapter, may do 69 29 any of the following: 69 30 a. Audit any cemetery, for cause or on a random basis, to 69 31 determine compliance with this chapter. A cemetery shall make 69 32 available to the commissioner or attorney general the 69 33 cemetery's deed registry and those books, accounts, records, 69 34 and files related to the sale of interment rights. 69 35 Notwithstanding chapter 22, all business records and files 70 1 acquired by the commissioner or attorney general pursuant to 70 2 an audit under this subsection are confidential and shall not 70 3 be made available for inspection or copying unless ordered by 70 4 a court for good cause shown. If it is determined pursuant to 70 5 an audit that a material violation of this chapter or rules 70 6 adopted pursuant to this chapter has occurred, the cost of the 70 7 audit may be assessed to the cemetery. 70 8 b. Administer oaths and affirmations, subpoena witnesses, 70 9 receive evidence, and require the production of documents and 70 10 records in connection with an investigation or proceeding 70 11 being conducted pursuant to this chapter. 70 12 c. Apply to the district court for issuance of an order 70 13 requiring a person's appearance before the commissioner or 70 14 attorney general, or a designee of either or both, where the 70 15 person has refused to obey a subpoena issued by the 70 16 commissioner or attorney general. The person may also be 70 17 required to produce documentary evidence germane to the 70 18 subject of the investigation. Failure to obey a court order 70 19 under this subsection constitutes contempt of court. 70 20 3. CEASE AND DESIST ORDERS. If an audit or investigation 70 21 provides reasonable evidence that a person has violated this 70 22 chapter, or any rule adopted pursuant to this chapter, the 70 23 commissioner may issue an order directed at the person to 70 24 cease and desist from engaging in such act or practice. 70 25 4. RECEIVERSHIPS. 70 26 a. The commissioner shall notify the attorney general if 70 27 the commissioner finds that a perpetual care cemetery subject 70 28 to regulation under this chapter meets one or more of the 70 29 following grounds for the establishment of a receivership: 70 30 (1) Is insolvent. 70 31 (2) Has utilized trust funds for personal or business 70 32 purposes in a manner inconsistent with the requirements of 70 33 this chapter, and the amount of funds currently held in the 70 34 trust is less than the amount required by this chapter. 70 35 b. The attorney general may apply to the district court in 71 1 any county of the state for a receivership. Upon proof of any 71 2 of the grounds for a receivership described in this section 71 3 the court may grant a receivership. 71 4 5. INJUNCTIONS. The attorney general may apply to the 71 5 district court for an injunction to restrain any cemetery 71 6 subject to this chapter and any agents, employees, trustees, 71 7 or associates of the cemetery from engaging in conduct or 71 8 practices deemed a violation of this chapter or rules adopted 71 9 pursuant to this chapter. Upon proof of any violation of this 71 10 chapter described in the petition for injunction, the court 71 11 may grant the injunction. Failure to obey a court order under 71 12 this subsection constitutes contempt of court. 71 13 Sec. 30. Section 566A.13, Code 1995, is amended to read as 71 14 follows: 71 15 566A.13 VIOLATIONS AND PENALTIES. 71 16 A violation of this chapter or rules adopted by the 71 17attorney generalcommissioner pursuant to this chapter is a 71 18 violation of section 714.16, subsection 2, paragraph "a". The 71 19 remedies and penalties provided by section 714.16, including 71 20 but not limited to, provisions relating to injunctive relief 71 21 and penalties, apply to a violation of this chapter. 71 22 Sec. 31. NEW SECTION. 566A.14 RULES. 71 23 The division of insurance may adopt rules pursuant to 71 24 chapter 17A as necessary and appropriate to administer this 71 25 chapter. 71 26 Sec. 32. NEW SECTION. 566A.15 CEMETERY FUND. 71 27 A special revenue fund is created in the state treasury, 71 28 under the control of the commissioner, to be known as the 71 29 insurance division cemetery fund. Commencing July 1, 1995, 71 30 filing fees received pursuant to sections 566A.2C and 566A.2D 71 31 and one dollar from the audit fee for each deed reported on 71 32 the annual report required by section 566A.2E, executed during 71 33 the preceding fiscal year, shall be deposited in the insurance 71 34 division cemetery fund by the commissioner. However, if the 71 35 balance of the fund on July 1 of any year exceeds two hundred 72 1 thousand dollars, the allocation to the fund shall not be 72 2 made, and the total sum of the fees paid pursuant to sections 72 3 566A.2C, 566A.2D, and 566A.2E shall be deposited in the 72 4 general fund of the state. Notwithstanding section 8.33, 72 5 moneys in the fund shall not revert to the general fund but 72 6 shall remain in the cemetery fund. Moneys in the cemetery 72 7 fund are appropriated to the insurance division and, subject 72 8 to authorization by the commissioner, may be used to pay the 72 9 expenses of that office incurred in the administration of the 72 10 audit, investigative, and enforcement duties and obligations 72 11 imposed under this chapter, and the expenses of receiverships 72 12 established pursuant to section 566A.12. 72 13 Sec. 33. CONDITION TO ENACTMENT OF CERTAIN PROVISIONS. 72 14 The section of this Act which amends Code section 566A.12 72 15 shall only be implemented if the general assembly makes an 72 16 appropriation of at least fifty thousand dollars and provides 72 17 for the employment of one full-time employee devoted to the 72 18 insurance division for the implementation of this Act. 72 19 EXPLANATION 72 20 This bill amends chapter 523A, which applies to funeral 72 21 services and merchandise, and chapter 523E, which applies to 72 22 cemetery merchandise, and creates a new chapter 523J, which 72 23 applies to cemeteries. 72 24 Section 523A.1 is amended to except caskets and other types 72 25 of inner burial containers or concrete burial vaults sold 72 26 after July 1, 1995, from language in that section which 72 27 defines when a delivery to a purchaser is made. 72 28 Section 523A.2, subsection 1, is amended to provide that 72 29 payments subject to the trust requirements of section 523A.1 72 30 are not to be commingled with other funds of the seller of 72 31 funeral services and merchandise. The section is also amended 72 32 to provide that unless such funds are directly deposited in a 72 33 trust account pursuant to section 523A.2, 100 percent of the 72 34 amount received by the seller is to be deposited in an escrow 72 35 account in an insured financial institution. The section is 73 1 also amended to require that the balance of each trust account 73 2 of the seller be reported annually to the insurance 73 3 commissioner, along with the identity of the purchaser or 73 4 beneficiary. 73 5 Section 523A.2, subsection 7 is amended to provide that 73 6 payments may be made directly to the insurance company by the 73 7 purchaser of the agreement, in any amount. If the payments 73 8 are not made directly to the insurance company by the 73 9 purchaser of the agreement, at least 80 percent of the 73 10 payments received by the seller under an agreement otherwise 73 11 subject to section 523A.1, shall be used to purchase the 73 12 insurance until an insurance policy has been issued and paid 73 13 in full for the amount of the agreement. 73 14 Section 523A.8, subsection 1, is amended to require certain 73 15 disclosures in an agreement for the sale of funeral services 73 16 and merchandise. 73 17 Section 523A.20 is amended to increase the amount allocated 73 18 from fees paid by sellers of funeral services and merchandise 73 19 to the insurance division regulatory fund from $1 to $2. The 73 20 section is also amended to decrease the fee to be assessed 73 21 establishment permit holders for each agreement reported on 73 22 the permit holder's annual report from $5 to $2. The $5 fee 73 23 on establishment holders is authorized for assessment on May 1 73 24 of 1994 and 1995. The $2 fee is to be assessed on May 1 of 73 25 1996 and 1997. The fee is to be used to fund consumer 73 26 education, audits, investigations, payments under contract 73 27 with licensed establishments to provide funeral and cemetery 73 28 merchandise or services in the event of statutory 73 29 noncompliance by the initial seller, liquidations, and 73 30 receiverships. 73 31 New section 523A.21 is created and provides that upon a 73 32 determination by the commissioner that grounds exist for an 73 33 administrative license revocation or suspension action by the 73 34 board of mortuary science examiners, the commissioner may 73 35 forward the grounds for the determination to that board. 74 1 New section 523A.22 establishes the process for the 74 2 liquidation of a funeral establishment which is found to be 74 3 insolvent or in such condition that the further transaction of 74 4 business would be hazardous, financially or otherwise, to its 74 5 preneed funeral customers or the public. The procedure 74 6 established is similar to the procedure established for the 74 7 liquidation of insurance companies. 74 8 Section 523E.2, subsection 1, is amended to provide that 74 9 payments subject to the trust requirements of section 523E.1 74 10 are not to be commingled with other funds of the seller of 74 11 funeral services and merchandise. The section is also amended 74 12 to provide that unless such funds are directly deposited in a 74 13 trust account pursuant to section 523E.2, 100 percent of the 74 14 amount received by the seller is to be deposited in an escrow 74 15 account in an insured financial institution. The section is 74 16 also amended to require that the balance of each trust account 74 17 of the seller be reported annually to the insurance 74 18 commissioner, along with the identity of the purchaser or 74 19 beneficiary. 74 20 Section 523E.8, subsection 1, is amended to require certain 74 21 disclosures in an agreement for the sale of funeral services 74 22 and merchandise. 74 23 Section 523E.20 is amended to increase the amount allocated 74 24 from fees paid by sellers of funeral services and merchandise 74 25 to the insurance division regulatory fund from one dollar to 74 26 two dollars. The section is also amended to decrease the fee 74 27 to be assessed establishment permit holders for each agreement 74 28 reported on the permit holder's annual report from $5 to $2. 74 29 The $5 fee on establishment holders is authorized for 74 30 assessment on May 1 of 1994 and 1995. The $2 fee is to be 74 31 assessed on May 1 of 1996 and 1997. The fee is to be used to 74 32 fund consumer education, audits, investigations, payments 74 33 under contract with licensed establishments to provide funeral 74 34 and cemetery merchandise or services in the event of statutory 74 35 noncompliance by the initial seller, liquidations, and 75 1 receiverships. 75 2 New section 523E.21 is created and provides that upon a 75 3 determination by the commissioner that grounds exist for an 75 4 administrative license revocation or suspension action by the 75 5 board of mortuary science examiners, the commissioner may 75 6 forward the grounds for the determination to that board. 75 7 New section 523J.1 is created and establishes the 75 8 definitions of terms used in the chapter including "abandoned 75 9 cemetery", "cemetery", "commissioner", "interment rights", and 75 10 "perpetual care cemetery". 75 11 New section 523J.2 is created and provides that cemeteries 75 12 organized or commencing business in this state on or after 75 13 July 1, 1995, are to operate as perpetual care cemeteries. 75 14 New section 523J.3 is created and provides that a perpetual 75 15 care cemetery is not to offer interment rights to the public 75 16 without a permit pursuant to chapter 523J. 75 17 New section 523J.4 is created and provides that the 75 18 commissioner may deny, suspend, or revoke a permit issued 75 19 under chapter 523J upon a finding that the owner of a cemetery 75 20 has committed a fraudulent practice or been convicted of a 75 21 felony related to the sale of interment rights or the sale of 75 22 funeral services, funeral merchandise, or cemetery 75 23 merchandise, or the cemetery's trust assets, warehoused 75 24 merchandise, surety bonds, or insurance funding are in 75 25 material noncompliance with applicable statutory provisions. 75 26 New section 523J.5 is created and establishes the process 75 27 for the liquidation of a funeral establishment which is found 75 28 to be insolvent or in such condition that the further 75 29 transaction of business would be hazardous, financially or 75 30 otherwise, to its customers or the public. The procedure 75 31 established is similar to the procedure established for the 75 32 liquidation of insurance companies. 75 33 New section 523J.6 is created and establishes the powers 75 34 and duties of a perpetual care cemetery. 75 35 New section 523J.7 is created and provides that the 76 1 insurance commissioner or the attorney general may investigate 76 2 a perpetual care cemetery to verify compliance with chapter 76 3 523J. 76 4 Section 566A.1 is amended to provide that a fraternal 76 5 society is subject to the provisions of chapter 566A and that 76 6 a political subdivision is subject to the chapter except for 76 7 sections 566A.3 and 566A.6. 76 8 New section 566A.1A is created establishing the definitions 76 9 for chapter 566A. 76 10 New section 566A.2A is created which requires perpetual 76 11 care cemeteries to maintain a registry of individuals 76 12 purchasing items subject to perpetual care. 76 13 New section 566A.2B is created and requires an agreement 76 14 for interment rights to be written in clear, understandable 76 15 language. The section also sets forth the contents of the 76 16 agreement. 76 17 New section 566A.2C is created and requires a religious 76 18 cemetery to file a written report with the insurance division 76 19 annually. The report is to be accompanied by a filing fee of 76 20 $100. 76 21 New section 566A.2D is created and requires a nonperpetual 76 22 care cemetery to file a written report with the insurance 76 23 division annually. The report is to be accompanied by a 76 24 filing fee of $100. 76 25 New section 566A.2E is created and requires a perpetual 76 26 care cemetery to file a written report with the insurance 76 27 division annually. The commissioner is to establish an audit 76 28 fee by rule to be filed with the annual report. 76 29 Section 566A.3 is amended to permit a perpetual care 76 30 cemetery to require a contribution to the cemetery's perpetual 76 31 care guarantee fund for each grave marker, tombstone, 76 32 monument, or item of ornamental merchandise installed or 76 33 placed in the cemetery. 76 34 Section 566A.5, which relates to nonperpetual care 76 35 cemeteries, is substantially rewritten and provides that a 77 1 legible sign must be posted indicating that the cemetery is a 77 2 nonperpetual care cemetery; requires such indication to be 77 3 included on the cemetery's contracts, deeds, statements, 77 4 letterhead, and advertising material; and prohibits the 77 5 cemetery from advertising as a perpetual care cemetery. 77 6 Section 566A.12, relating to perpetual care cemetery 77 7 records, is struck, is rewritten, and provides for a cemetery 77 8 registry to be established by the insurance commissioner, 77 9 annual reports to be filed concerning the number of interments 77 10 made and the amount of the principal of the cemetery's 77 11 perpetual care funds, investigations and audits of cemeteries 77 12 by the insurance commissioner or the attorney general, and 77 13 certain regulatory powers. 77 14 Section 566A.13, relating to penalties, reflects that rules 77 15 will be adopted pursuant to the chapter by the insurance 77 16 commissioner and not the attorney general. 77 17 New section 566A.14 is created and authorizes the division 77 18 of insurance to adopt rules as necessary for the 77 19 administration of chapter 566A. 77 20 New section 566A.15 is created and establishes the 77 21 insurance division cemetery fund. 77 22 Section 33 of the bill conditions the implementation of 77 23 566A.12, as rewritten, upon an appropriation to the insurance 77 24 division of $50,000 and one full-time equivalent position. 77 25 This bill may create a state mandate as defined in chapter 77 26 25B. 77 27 LSB 1712SC 76 77 28 mj/cf/24
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