Text: H01447 Text: H01449 Text: H01400 - H01499 Text: H Index Bills and Amendments: General Index Bill History: General Index
PAG LIN
1 1 Amend Senate File 473, as passed by the Senate, as
1 2 follows:
1 3 #1. Page 7, by inserting after line 4, the
1 4 following:
1 5 "SUBCHAPTER 1
1 6 SHORT TITLE AND DEFINITIONS
1 7 Sec. . NEW SECTION. 523A.101 SHORT TITLE.
1 8 This chapter may be cited as the "Iowa Cemetery and
1 9 Funeral Merchandise and Funeral Services Act".
1 10 Sec. . NEW SECTION. 523A.102 DEFINITIONS.
1 11 For purposes of this chapter, unless the context
1 12 otherwise requires:
1 13 1. "Authorized to do business within this state"
1 14 means a person licensed, registered, or subject to
1 15 regulation by an agency of the state of Iowa or who
1 16 has filed a consent to service of process with the
1 17 commissioner for purposes of this chapter.
1 18 2. "Beneficiary" means any natural person
1 19 specified or included in a purchase agreement, upon
1 20 whose future death cemetery merchandise, funeral
1 21 merchandise, funeral services, or a combination
1 22 thereof are to be provided under the purchase
1 23 agreement.
1 24 3. "Burial account" means an account established
1 25 by a person with a financial institution for the
1 26 purpose of funding the future purchase of cemetery
1 27 merchandise, funeral merchandise, or a combination
1 28 thereof without any related trust agreement.
1 29 4. "Burial trust fund" means an irrevocable burial
1 30 trust fund established by a person with a financial
1 31 institution for the purpose of funding the future
1 32 purchase of cemetery merchandise, funeral merchandise,
1 33 funeral services, or a combination thereof upon the
1 34 death of the person named in the burial trust fund's
1 35 records or a related purchase agreement. "Burial
1 36 trust fund" does not include or imply the existence of
1 37 any oral or written purchase agreement for cemetery
1 38 merchandise, funeral merchandise, funeral services, or
1 39 a combination thereof between the person and a seller.
1 40 5. "Cemetery merchandise" means foundations, grave
1 41 markers, tombstones, ornamental merchandise,
1 42 memorials, and monuments sold under a purchase
1 43 agreement that does not require installation within
1 44 twelve months of the purchase.
1 45 6. "Commissioner" means the commissioner of
1 46 insurance or the deputy administrator authorized in
1 47 section 523A.801 to the extent the commissioner
1 48 delegates functions to the deputy administrator.
1 49 7. "Common business enterprise" means a group of
1 50 two or more business entities that share common
2 1 ownership in excess of fifty percent.
2 2 8. "Credit sale" means a sale of goods, services,
2 3 or an interest in land in which all of the following
2 4 are applicable:
2 5 a. Credit is granted either under a seller credit
2 6 card or by a seller who regularly engages as a seller
2 7 in credit transactions of the same kind.
2 8 b. The buyer is a person other than an
2 9 organization.
2 10 c. The goods, services, or interest in land are
2 11 purchased primarily for a personal, family, or
2 12 household purpose.
2 13 d. Either the debt is payable in installments or a
2 14 finance charge is made.
2 15 e. For goods and services, the amount financed
2 16 does not exceed twenty-five thousand dollars.
2 17 9. "Delivery" occurs when:
2 18 a. The cemetery merchandise, funeral merchandise,
2 19 or the title document establishing an easement for
2 20 burial rights is physically delivered to the purchaser
2 21 or installed, except that burial of any item at the
2 22 site of its ultimate use shall not constitute delivery
2 23 for purposes of this chapter.
2 24 b. If authorized by a purchaser under a purchase
2 25 agreement, cemetery merchandise has been permanently
2 26 identified with the name of the purchaser or the
2 27 beneficiary and delivered to a bonded warehouse or
2 28 storage facility approved by the commissioner and both
2 29 title to the merchandise and a warehouse receipt have
2 30 been delivered to the purchaser or beneficiary and a
2 31 copy of the warehouse receipt has been delivered to
2 32 the establishment for retention in its files.
2 33 c. If authorized by a purchaser under a purchase
2 34 agreement, a polystyrene or polypropylene outer burial
2 35 container has been permanently identified with the
2 36 name of the purchaser or the beneficiary and delivered
2 37 to a bonded warehouse or storage facility approved by
2 38 the commissioner and both title to the merchandise and
2 39 a warehouse receipt have been delivered to the
2 40 purchaser or beneficiary and a copy of the warehouse
2 41 receipt has been delivered to the establishment for
2 42 retention in its files.
2 43 10. "Doing business in this state" means issuing
2 44 or performing wholly or in part any term of a purchase
2 45 agreement executed within the state of Iowa.
2 46 11. "Establishment" means each business
2 47 establishment that advertises, sells, promotes, or
2 48 offers cemetery merchandise, funeral merchandise,
2 49 funeral services, or a combination thereof prior to
2 50 the death of the person named or implied in a purchase
3 1 agreement.
3 2 12. "Financial institution" means a state or
3 3 federally insured bank, savings and loan association,
3 4 credit union, trust department thereof, or a trust
3 5 company authorized to do business within this state
3 6 and which has been granted trust powers under the laws
3 7 of this state or the United States, which holds funds
3 8 under a trust agreement. "Financial institution" does
3 9 not include:
3 10 a. A seller.
3 11 b. Anyone employed by or directly involved with
3 12 the seller in the seller's cemetery merchandise,
3 13 funeral merchandise, or funeral services business.
3 14 13. "Funeral merchandise" means personal property
3 15 used for the final disposition of a dead human body,
3 16 including but not limited to clothing, caskets,
3 17 vaults, urns, and interment receptacles. "Funeral
3 18 merchandise" does not include easements for burial
3 19 rights in a completed space or cemetery merchandise.
3 20 14. "Funeral services" means services provided for
3 21 the final disposition of a dead human body, including
3 22 but not limited to services necessarily or customarily
3 23 provided for a funeral, or for the interment,
3 24 entombment, or cremation of a dead human body, or any
3 25 combination thereof. "Funeral services" does not
3 26 include perpetual care or maintenance.
3 27 15. "Inner burial container" means a container in
3 28 which human remains are placed for burial or
3 29 entombment. Where only one container is used for
3 30 burial or entombment, "inner burial container"
3 31 includes a container serving as a burial vault, urn
3 32 vault, grave box, grave liner, or lawn crypt.
3 33 16. "Insolvent" means the inability to pay debts
3 34 as they become due in the usual course of business.
3 35 17. "Interest or income" means unrealized net
3 36 appreciation or loss in the fair value of cemetery
3 37 merchandise, funeral merchandise, and funeral services
3 38 trust assets for which a market value may be
3 39 determined with reasonable certainty, plus the return
3 40 in money or property derived from the use of trust
3 41 principal or income, net of investment losses, taxes,
3 42 and expenses incurred in the sale of trust assets, any
3 43 cost of the operation of the trust, and any annual
3 44 audit fee. "Interest or income" includes but is not
3 45 limited to:
3 46 a. Rent of real or personal property, including
3 47 sums received for cancellation or renewal of a lease
3 48 and any royalties.
3 49 b. Interest on money lent, including sums received
3 50 as consideration for prepayment of principal.
4 1 c. Cash dividends paid on corporate stock.
4 2 d. Interest paid on deposit funds or debt
4 3 obligations.
4 4 e. Gain realized from the sale of trust assets.
4 5 18. "Next of kin" means the surviving spouse and
4 6 heirs at law of the deceased.
4 7 19. "Nonguaranteed" means that the price of the
4 8 merchandise and services selected has not been fixed
4 9 or guaranteed and will be determined by existing
4 10 prices at the time the merchandise and services are
4 11 delivered or provided.
4 12 20. "Outer burial container" means a container
4 13 used for the burial of human remains that is used
4 14 exclusively to surround or enclose an inner burial
4 15 container and to support the earth above the
4 16 container, commonly known as a burial vault, urn
4 17 vault, grave box, or grave liner, but not including a
4 18 lawn crypt.
4 19 21. "Parent company" means a corporation that has
4 20 a controlling interest in an establishment.
4 21 22. "Person" means an individual, business,
4 22 corporation, trust, firm, partnership, association, or
4 23 any other legal entity.
4 24 23. "Personal representative" means a personal
4 25 representative as defined in section 633.3.
4 26 24. "Provider" means a person that provides
4 27 funeral services, funeral merchandise, or cemetery
4 28 merchandise purchased in a purchase agreement.
4 29 25. "Purchase agreement" means an agreement to
4 30 furnish cemetery merchandise, funeral merchandise,
4 31 funeral services, or a combination thereof when
4 32 performance or delivery may be more than one hundred
4 33 twenty days following the initial payment on the
4 34 account.
4 35 26. "Purchase price" means the negotiated price
4 36 for the item of merchandise or service, if itemized in
4 37 the purchase agreement, or the price of the item
4 38 listed in the seller's general price list at the time
4 39 the purchase agreement is signed.
4 40 27. "Purchaser" means a person who purchases
4 41 cemetery merchandise, funeral merchandise, funeral
4 42 services, or a combination thereof. The purchaser
4 43 need not be a beneficiary of the agreement.
4 44 28. "Seller" means a person doing business within
4 45 this state, including a person doing business within
4 46 this state who sells insurance, who advertises, sells,
4 47 promotes, or offers to furnish cemetery merchandise,
4 48 funeral merchandise, funeral services, or a
4 49 combination thereof when performance or delivery may
4 50 be more than one hundred twenty days following the
5 1 initial payment on the account whether the transaction
5 2 is completed or offered in person, through the mail,
5 3 over the telephone, by the internet, or through any
5 4 other means of commerce. "Seller" includes any person
5 5 performing any term of a purchase agreement executed
5 6 within this state, and any person identified under a
5 7 burial account as the provider of cemetery
5 8 merchandise, funeral merchandise, funeral services, or
5 9 a combination thereof.
5 10 29. "Total purchase price" means the aggregate
5 11 amount the purchaser is obligated to pay for
5 12 merchandise or services pursuant to the purchase
5 13 agreement, excluding any taxes, administrative
5 14 charges, or financing charges.
5 15 SUBCHAPTER 2
5 16 ESTABLISHMENT OF TRUSTS, DEPOSIT, INVESTMENT,
5 17 AND REPORTING REQUIREMENTS
5 18 Sec. . NEW SECTION. 523A.201 ESTABLISHMENT OF
5 19 TRUST FUNDS.
5 20 Unless proceeding under section 523A.401, 523A.402,
5 21 or 523A.403, a seller must establish a trust fund
5 22 prior to advertising, selling, promoting, or offering
5 23 cemetery merchandise, funeral merchandise, funeral
5 24 services, or a combination thereof in this state as
5 25 follows:
5 26 1. The trust fund must be established at a
5 27 financial institution.
5 28 2. If a seller agrees to furnish cemetery
5 29 merchandise, funeral merchandise, funeral services, or
5 30 a combination thereof and performance or delivery may
5 31 be more than one hundred twenty days following the
5 32 initial payment on the account, a minimum of eighty
5 33 percent of all payments made under the purchase
5 34 agreement shall be placed and remain in trust until
5 35 the person for whose benefit the funds were paid dies.
5 36 3. If a purchase agreement for cemetery
5 37 merchandise, funeral merchandise, funeral services, or
5 38 a combination thereof provides that payments are to be
5 39 made in installments, the seller shall deposit eighty
5 40 percent of each payment in the trust fund until the
5 41 full amount required to be placed in trust has been
5 42 deposited. If the purchase agreement is financed with
5 43 or sold to a financial institution, the purchase
5 44 agreement shall be considered paid in full and the
5 45 trust requirements shall be satisfied within fifteen
5 46 days after the close of the month in which the seller
5 47 receives funds from the financial institution.
5 48 4. A seller shall not invade the trust principal
5 49 for any purpose.
5 50 5. A seller who lacks insurance coverage which
6 1 protects against the loss of purchaser payments not
6 2 placed in trust within the time period required by
6 3 this section and section 523A.202 shall not commingle
6 4 these payments with any other seller funds. A seller
6 5 who lacks insurance coverage may use one or more of
6 6 the following methods to dispose of these payments:
6 7 a. Deposit purchaser funds into an escrow account
6 8 until the required amount has been deposited into a
6 9 trust account at a financial institution.
6 10 b. Make a prior delivery or warehouse cemetery or
6 11 funeral merchandise or a combination thereof as
6 12 provided by this chapter.
6 13 c. Make a prior filing of a surety bond in lieu of
6 14 establishing a trust fund as required by this section.
6 15 d. Make a simultaneous, same-day deposit of the
6 16 purchaser's payments into the seller's bank account
6 17 and the required amount into the seller's trust fund.
6 18 6. Payments otherwise subject to this section are
6 19 not exempt merely because they are held in
6 20 certificates of deposit.
6 21 7. Commingling of trust funds with other funds of
6 22 the seller is prohibited.
6 23 8. Interest or income earned on amounts deposited
6 24 in trust shall remain in trust under the same terms
6 25 and conditions as payments made under the purchase
6 26 agreement, except that the seller may withdraw so much
6 27 of the interest or income as represents the difference
6 28 between the amount needed to adjust the trust funds
6 29 for inflation as set by the commissioner based on the
6 30 consumer price index and the interest or income earned
6 31 during the preceding year not to exceed fifty percent
6 32 of the total interest or income on a calendar-year
6 33 basis. The early withdrawal of interest or income
6 34 under this provision does not affect the purchaser's
6 35 right to a credit of such interest or income in the
6 36 event of a nonguaranteed price agreement,
6 37 cancellation, or nonperformance by the seller.
6 38 9. The commissioner may require amendments to a
6 39 trust agreement not in accord with the provisions of
6 40 this chapter.
6 41 10. If a seller voluntarily or involuntarily
6 42 ceases doing business and the seller's obligation to
6 43 provide merchandise or services has not been assumed
6 44 by another establishment holding a current
6 45 establishment permit, all trust funds, including
6 46 accrued interest or income, shall be repaid to the
6 47 purchaser within one hundred twenty days following the
6 48 seller's cessation of business or, in the event of
6 49 circumstances where a payment is not possible within
6 50 one hundred twenty days, as soon as is reasonably
7 1 practicable.
7 2 Sec. . NEW SECTION. 523A.202 TRUST FUND
7 3 DEPOSIT REQUIREMENTS.
7 4 1. All funds held in trust pursuant to section
7 5 523A.201 shall be deposited in a financial
7 6 institution, within fifteen days after the close of
7 7 the month a seller receives the funds. The financial
7 8 institution shall hold the funds for the designated
7 9 beneficiary until released.
7 10 2. All funds required to be deposited by the
7 11 purchaser for a purpose described in section 523A.201
7 12 shall be deposited consistent with one of the
7 13 following methods:
7 14 a. The payments shall be deposited directly into
7 15 an interest-bearing burial account in the purchaser's
7 16 name.
7 17 b. The purchaser shall deposit payments directly
7 18 into a separate trust account in the purchaser's name.
7 19 The account may be made payable to the seller upon the
7 20 death of the purchaser or the designated beneficiary,
7 21 provided that, until death, the purchaser retains the
7 22 exclusive power to hold, manage, pledge, and invest
7 23 the trust account funds and may revoke the trust and
7 24 withdraw the funds, in whole or in part, at any time
7 25 during the term of the agreement.
7 26 c. The purchaser or the seller shall deposit
7 27 payments directly into a separate trust account in the
7 28 name of the purchaser, as trustee, for the named
7 29 beneficiary, to be held, invested, and administered as
7 30 a trust account for the benefit and protection of the
7 31 beneficiary. The depositor shall notify the financial
7 32 institution of the existence and terms of the trust,
7 33 including at a minimum, the name of each party to the
7 34 agreement, the name and address of the trustee, and
7 35 the name and address of the beneficiary. The account
7 36 may be made payable to the seller upon the
7 37 beneficiary's death.
7 38 d. The payments shall be deposited in the name of
7 39 the trustee, as trustee, under the terms of a master
7 40 trust agreement and the trustee may invest, reinvest,
7 41 exchange, retain, sell, and otherwise manage the trust
7 42 fund for the benefit and protection of the named
7 43 beneficiary.
7 44 3. The commissioner may by rule authorize other
7 45 methods of deposit upon a finding that such methods
7 46 provide equivalent safety of the principal and
7 47 interest or income and the seller lacks access to the
7 48 proceeds prior to performance.
7 49 4. This section does not prohibit moving trust
7 50 funds from one financial institution to another.
8 1 Sec. . NEW SECTION. 523A.203 FINANCIAL
8 2 INSTITUTION TRUSTEE QUALIFICATION AND INVESTMENT
8 3 REQUIREMENTS.
8 4 1. A financial institution may serve as a trustee
8 5 if granted those powers under the laws of this state
8 6 or of the United States. A financial institution
8 7 acting as a trustee of trust funds under this chapter
8 8 shall invest the funds in accordance with applicable
8 9 law.
8 10 2. A financial institution acting as a trustee of
8 11 trust funds under this chapter has a fiduciary duty to
8 12 make reasonable investment decisions and to properly
8 13 oversee and manage the funds entrusted to it. The
8 14 trustee shall use the judgment and care under the
8 15 circumstances then prevailing that persons of
8 16 prudence, discretion, and intelligence exercise in the
8 17 management of their own affairs, not in regard to
8 18 speculation but in regard to the permanent disposition
8 19 of their funds, considering the probable income as
8 20 well as the probable safety of their capital. The
8 21 commissioner may take enforcement action against a
8 22 financial institution in its capacity as trustee for a
8 23 breach of fiduciary duty proven under this chapter.
8 24 3. Moneys deposited under a master trust agreement
8 25 may be commingled by the financial institution for
8 26 investment purposes if each deposit includes a
8 27 detailed listing of the amount deposited in trust for
8 28 each beneficiary and maintenance of a separate
8 29 accounting of each purchaser's principal, interest,
8 30 and income.
8 31 4. Subject to a master trust agreement, the seller
8 32 may appoint an independent investment adviser to
8 33 advise the financial institution about investment of
8 34 the trust funds.
8 35 5. Subject to agreement between the parties, the
8 36 financial institution may receive a reasonable fee
8 37 from the trust funds for services rendered as trustee.
8 38 The trust shall pay the trust operation costs and any
8 39 annual audit fees.
8 40 6. The seller or any officer, director, agent,
8 41 employee, or affiliate of the seller shall not serve
8 42 as trustee. A financial institution holding trust
8 43 funds shall not do any of the following:
8 44 a. Be owned, under the control of, or affiliated
8 45 with a seller.
8 46 b. Use any funds required to be held in trust
8 47 under this chapter or chapter 566A to purchase an
8 48 interest in any contract or agreement to which a
8 49 seller is a party.
8 50 c. Otherwise invest, directly or indirectly, in a
9 1 seller's business operations.
9 2 Sec. . NEW SECTION. 523A.204 ESTABLISHMENT
9 3 ANNUAL REPORTING REQUIREMENTS.
9 4 1. An establishment shall file with the
9 5 commissioner not later than March 1 of each year an
9 6 annual report on a form prescribed by the commissioner
9 7 containing all of the following:
9 8 a. The seller's name and address and the name and
9 9 address of the establishment that will provide the
9 10 cemetery merchandise, funeral merchandise, funeral
9 11 services, or a combination thereof.
9 12 b. The balance of each trust account as of the end
9 13 of the preceding calendar year, identified by
9 14 purchaser or beneficiary name.
9 15 c. A report of any amounts withdrawn from the
9 16 trust account including the reason for each
9 17 withdrawal.
9 18 d. A detailed listing of the insurance funding
9 19 outstanding at the end of the preceding calendar year,
9 20 identified by the name of the purchaser or the
9 21 beneficiary.
9 22 e. A complete inventory of the cemetery
9 23 merchandise, funeral merchandise, or a combination
9 24 thereof delivered in lieu of trust fund requirements
9 25 under section 523A.401, including the following:
9 26 (1) The location of the merchandise.
9 27 (2) Merchandise serial numbers or warehouse
9 28 receipt numbers identified by the name of the
9 29 purchaser or the beneficiary.
9 30 (3) A verified statement of a certified public
9 31 accountant on a form prescribed by the commissioner
9 32 that all of the following have occurred:
9 33 (a) A physical inventory of the cemetery
9 34 merchandise or funeral merchandise has been conducted.
9 35 (b) Each item of that merchandise is in the
9 36 seller's possession at the specified location.
9 37 f. The purchaser and beneficiary names, the amount
9 38 of each purchase agreement made in the preceding year,
9 39 and the date the purchase agreement was made.
9 40 g. A summary of any purchase agreements converted
9 41 from trust-funded benefits to insurance-funded or
9 42 annuity benefits during the preceding year which shall
9 43 include, as of the conversion date, the following
9 44 information, as well as aggregated totals for each of
9 45 the following categories of information, if
9 46 appropriate:
9 47 (1) Insured's name.
9 48 (2) Insured's policy number.
9 49 (3) Original prepaid purchase agreement amount.
9 50 (4) Amount paid in.
10 1 (5) Unpaid balance of the prepaid purchase
10 2 agreement.
10 3 (6) Unpaid balance of the purchase agreement.
10 4 (7) Amount retained by the establishment.
10 5 (8) Amount applied to the purchase of the
10 6 insurance policy or annuity.
10 7 (9) Initial cash surrender value and initial death
10 8 benefit under the insurance policy.
10 9 The establishment shall include a notarized
10 10 statement attesting that the insurance policies or
10 11 annuities have been issued and funded on behalf of the
10 12 purchasers listed in the summary and that all notices
10 13 required under this section have been given.
10 14 h. A summary of any purchase agreements converted
10 15 from trust-funded benefits to a surety bond during the
10 16 preceding year which shall include, as of the
10 17 conversion date, the following information, as well as
10 18 aggregated totals for each of the following categories
10 19 of information, if appropriate:
10 20 (1) Name of the purchaser and beneficiary.
10 21 (2) Original prepaid purchase agreement amount.
10 22 (3) Amount paid in.
10 23 (4) Unpaid balance of the prepaid purchase
10 24 agreement.
10 25 (5) Unpaid balance of the purchase agreement.
10 26 (6) Amount retained by the establishment.
10 27 (7) Amount applied to the purchase of the surety
10 28 bond.
10 29 (8) A description of the surety bond and the
10 30 applicable amount of coverage.
10 31 i. Any other information the commissioner deems
10 32 necessary for the administration of this chapter.
10 33 2. A person holding multiple establishment permits
10 34 may elect to file only one annual report after noting
10 35 all establishments on the report.
10 36 3. An establishment shall make a good faith effort
10 37 to complete the annual report. The establishment
10 38 shall note on the annual report any information not
10 39 reasonably available to the establishment as an
10 40 exception or variance. Account balances within twelve
10 41 months of the date of the filing of the annual report
10 42 shall be accepted if the actual date of the account
10 43 balances is noted.
10 44 4. In lieu of the annual report form described in
10 45 subsection 1, the commissioner may authorize an
10 46 establishment to file a short form annual report on a
10 47 form prescribed by the commissioner. The short form
10 48 annual report may incorporate by reference information
10 49 readily available to the establishment. The
10 50 commissioner may certify and decertify establishments
11 1 authorized to file the short form based upon:
11 2 a. The establishment's recordkeeping system.
11 3 b. The number of purchase agreements which the
11 4 establishment has sold that are subject to regulation
11 5 under chapter 523A.
11 6 c. The availability and accessibility of
11 7 information at the establishment for purchase
11 8 agreements subject to regulation.
11 9 d. Whether the establishment places one hundred
11 10 percent of funds received pursuant to its purchase
11 11 agreements in trust.
11 12 e. The findings of the commissioner concerning
11 13 audits and consumer complaints.
11 14 The commissioner shall retain the authority to
11 15 require establishments permitted to file the short
11 16 form annual report to provide all of the information
11 17 required in the annual report form required by
11 18 subsection 1 for audit purposes or otherwise.
11 19 5. An establishment filing an annual report shall
11 20 pay a filing fee of ten dollars per purchase agreement
11 21 sold during the year covered by the report. The fee
11 22 does not apply to any of the following:
11 23 a. A purchase agreement where the beneficiary dies
11 24 in the same year the agreement was sold.
11 25 b. Any modifications or additions, such as
11 26 payments, for an existing purchase agreement sold in a
11 27 previous year.
11 28 c. An additional agreement purchased and already
11 29 reported to the commissioner by the purchaser.
11 30 d. A purchase agreement canceled or revoked in the
11 31 same year it was sold.
11 32 All purchase agreement changes for which a filing
11 33 fee is not required must be reported to the
11 34 commissioner on the annual report for the year
11 35 covered.
11 36 6. As part of the annual filing with the
11 37 commissioner, an establishment shall file an
11 38 authorization for the commissioner or a designee to
11 39 investigate, audit, and verify all funds, accounts,
11 40 safe deposit boxes, and other evidence of
11 41 establishment trust funds held by or in a financial
11 42 institution.
11 43 7. Forms may be obtained at cost from the
11 44 commissioner upon request. The commissioner may
11 45 accept annual reports submitted in an electronic
11 46 format, including but not limited to computer
11 47 diskettes.
11 48 8. Notwithstanding chapter 22, all records
11 49 maintained by the commissioner under this section
11 50 shall be confidential and shall not be made available
12 1 for inspection or copying except upon approval of the
12 2 commissioner or the attorney general.
12 3 Sec. . NEW SECTION. 523A.205 FINANCIAL
12 4 INSTITUTION ANNUAL REPORTING REQUIREMENTS.
12 5 1. A financial institution shall file with the
12 6 commissioner not later than March 1 of each year an
12 7 annual report on a form prescribed by the commissioner
12 8 showing all funds deposited by an establishment under
12 9 a trust agreement during the previous year. Each
12 10 report shall contain all information requested.
12 11 2. Forms may be obtained from the commissioner
12 12 upon request. The commissioner may accept annual
12 13 reports submitted in an electronic format, including
12 14 but not limited to computer diskettes.
12 15 3. Notwithstanding chapter 22, all records
12 16 maintained by the commissioner under this section
12 17 shall be confidential and shall not be made available
12 18 for inspection or copying except upon approval of the
12 19 commissioner or the attorney general.
12 20 Sec. . NEW SECTION. 523A.206 AUDITS.
12 21 1. The commissioner may make audits of the
12 22 establishment and of the records of a seller, at the
12 23 times and in the scope the commissioner determines.
12 24 The audits may be made without prior notice to the
12 25 seller. The commissioner may copy all records the
12 26 commissioner feels are necessary to conduct the audit.
12 27 The commissioner may require an audit of a seller or
12 28 other person by a certified public accountant to
12 29 verify compliance with this chapter, implementing
12 30 rules, or orders.
12 31 2. A seller or other person shall pay for the
12 32 audit unless the commissioner waives this requirement.
12 33 The cost of an audit involving multiple sellers or
12 34 other persons shall be prorated among them upon any
12 35 reasonable basis as determined by the commissioner.
12 36 The accountant shall deliver the audit report to the
12 37 commissioner and to the seller or other persons.
12 38 3. The commissioner shall not make public the
12 39 information obtained in the course of an audit, except
12 40 when a duty under this chapter requires the
12 41 commissioner to take action against a seller or to
12 42 cooperate with another enforcement or regulatory
12 43 agency, or except when the commissioner is called as a
12 44 witness in a civil or criminal proceeding.
12 45 SUBCHAPTER 3
12 46 DISBURSEMENT OF REMAINING BURIAL ACCOUNT FUNDS,
12 47 BURIAL TRUST FUNDS, AND INSURANCE OR ANNUITY PROCEEDS
12 48 UNDER THE REQUIREMENTS OF SECTION 249A.5
12 49 Sec. . NEW SECTION. 523A.301 DEFINITION.
12 50 As used in sections 523A.302 and 523A.303,
13 1 "director" means the director of human services.
13 2 Sec. . NEW SECTION. 523A.302 IDENTIFICATION
13 3 OF MERCHANDISE AND SERVICE PROVIDER.
13 4 If a burial trust fund identifies, either in the
13 5 trust fund records or in a related purchase agreement,
13 6 the seller who will provide the cemetery merchandise,
13 7 funeral merchandise, funeral services or a combination
13 8 thereof, the trust fund records or the related
13 9 purchase agreements must contain a statement signed by
13 10 an authorized representative of the seller agreeing to
13 11 furnish the cemetery merchandise, funeral merchandise,
13 12 funeral services, or a combination thereof upon the
13 13 death of the beneficiary. The burial trust fund shall
13 14 not identify a specific seller as payee unless the
13 15 trust fund records or the related purchase agreements,
13 16 if any, contain the signature of an authorized
13 17 representative of the seller and, if the agreement is
13 18 for funeral services as defined in chapter 156, the
13 19 name of a funeral director licensed to deliver those
13 20 services. A person may enter into agreements
13 21 authorizing the establishment of more than one burial
13 22 trust fund and agreeing to furnish the applicable
13 23 merchandise and services.
13 24 Sec. . NEW SECTION. 523A.303 DISBURSEMENT OF
13 25 REMAINING FUNDS.
13 26 1. If funds remain in a nonguaranteed irrevocable
13 27 burial trust fund or from the proceeds of an insurance
13 28 policy or annuity made payable or assigned to the
13 29 seller or a provider after the payment of funeral and
13 30 burial expenses in accordance with the conditions and
13 31 terms of the purchase agreement for cemetery
13 32 merchandise, funeral merchandise, or funeral services,
13 33 the seller shall comply with all of the following:
13 34 a. The seller shall provide written notice by mail
13 35 to the director under subsection 2.
13 36 b. At least sixty days after mailing notice to the
13 37 director, the seller shall disburse any remaining
13 38 funds from the burial trust fund as follows:
13 39 (1) If within the sixty-day period the seller
13 40 receives a claim from the personal representative of
13 41 the deceased, any remaining funds shall be disbursed
13 42 to the personal representative, notwithstanding any
13 43 claim by the director.
13 44 (2) If within the sixty-day period the seller has
13 45 not received a claim from the personal representative
13 46 of the deceased but receives a claim from the
13 47 director, the seller shall disburse the remaining
13 48 funds up to the amount of the claim to the director.
13 49 (3) Any remaining funds not disposed of pursuant
13 50 to subparagraphs (1) and (2) shall be disbursed to any
14 1 person who is identified as the next of kin of the
14 2 deceased in an affidavit submitted in accordance with
14 3 subsection 5.
14 4 2. The notice mailed to the director shall meet
14 5 all of the following requirements and is subject to
14 6 all of the following conditions:
14 7 a. The notice shall be mailed with postage
14 8 prepaid.
14 9 b. If the notice is sent by regular mail, the
14 10 sixty-day period for receipt of a response is deemed
14 11 to commence three days following the date of mailing.
14 12 c. If the notice is sent by certified mail, the
14 13 sixty-day period for receipt of a response is deemed
14 14 to commence on the date of mailing.
14 15 d. The notice shall provide all of the following
14 16 information:
14 17 (1) Current name, address, and telephone number of
14 18 the seller.
14 19 (2) Full name of the deceased.
14 20 (3) Date of the deceased's death.
14 21 (4) Amount of funds remaining in the burial trust
14 22 fund.
14 23 (5) Statement that any claim by the director must
14 24 be received by the seller within sixty days after the
14 25 date of mailing of the notice.
14 26 e. A notice in substantially the following form
14 27 complies with this subsection:
14 28 "TO: THE DIRECTOR OF HUMAN SERVICES
14 29 FROM: (SELLER'S NAME, CURRENT ADDRESS, AND
14 30 TELEPHONE NUMBER)
14 31 YOU ARE HEREBY NOTIFIED THAT (NAME OF DECEASED),
14 32 WHO HAD AN IRREVOCABLE BURIAL TRUST FUND, HAS DIED,
14 33 THAT FINAL PAYMENT FOR CEMETERY MERCHANDISE, FUNERAL
14 34 MERCHANDISE, AND FUNERAL SERVICES HAS BEEN MADE, AND
14 35 THAT (REMAINING AMOUNT) REMAINS IN THE IRREVOCABLE
14 36 BURIAL TRUST FUND.
14 37 THE ABOVE-NAMED SELLER MUST RECEIVE A WRITTEN
14 38 RESPONSE REGARDING ANY CLAIM BY THE DIRECTOR WITHIN
14 39 SIXTY DAYS AFTER THE MAILING OF THIS NOTICE TO THE
14 40 DIRECTOR.
14 41 IF THE ABOVE-NAMED SELLER DOES NOT RECEIVE A
14 42 WRITTEN RESPONSE REGARDING A CLAIM BY THE DIRECTOR
14 43 WITHIN SIXTY DAYS AFTER THE MAILING OF THIS NOTICE,
14 44 THE SELLER MAY DISPOSE OF THE REMAINING FUNDS IN
14 45 ACCORDANCE WITH SECTION 523A.303, CODE OF IOWA."
14 46 3. Upon receipt of the seller's written notice,
14 47 the director shall determine if a debt is due the
14 48 department of human services pursuant to section
14 49 249A.5. If the director determines that a debt is
14 50 owing, the director shall provide a written response
15 1 to the seller within sixty days after the mailing of
15 2 the seller's notice. If the director does not respond
15 3 with a claim within the sixty-day period, any claim
15 4 made by the director shall not be enforceable against
15 5 the seller, the trust, or a trustee.
15 6 4. A personal representative who wishes to make a
15 7 claim shall send written notice of the claim to the
15 8 seller. If the seller does not receive any claim from
15 9 a personal representative within the sixty-day period
15 10 provided for response by the director regarding a
15 11 claim, the claim of the personal representative shall
15 12 not be enforceable against the seller, the trust, or a
15 13 trustee.
15 14 5. Any person other than a personal representative
15 15 or the director claiming an interest in the remaining
15 16 funds shall submit an affidavit claiming an interest
15 17 which provides the following information:
15 18 a. Full name, current address, and telephone
15 19 number of the claimant.
15 20 b. Claimant's relationship to the deceased.
15 21 c. Name of any surviving next of kin of the
15 22 deceased, and the relationship of any named surviving
15 23 next of kin.
15 24 d. That the claimant has no knowledge of the
15 25 existence of a personal representative for the
15 26 deceased's estate.
15 27 6. The seller may retain not more than fifty
15 28 dollars of the remaining funds in the burial trust
15 29 fund for the administrative expenses associated with
15 30 the requirements of this section.
15 31 7. If the funds remaining in a burial trust fund
15 32 are disbursed under the requirements of this section,
15 33 the seller, the provider, the burial trust fund, and
15 34 any trustee shall not be liable to the director, the
15 35 estate of the deceased, any personal representative,
15 36 or any other interested person for the remaining funds
15 37 and any lien imposed by the director shall be
15 38 unenforceable against the seller, the burial trust
15 39 fund, or any trustee.
15 40 SUBCHAPTER 4
15 41 TRUSTING ALTERNATIVES
15 42 Sec. . NEW SECTION. 523A.401 PURCHASE
15 43 AGREEMENTS FUNDED BY INSURANCE PROCEEDS.
15 44 1. A purchase agreement may be funded by insurance
15 45 proceeds derived from a new or existing insurance
15 46 policy issued by an insurance company authorized to do
15 47 business and doing business within this state.
15 48 2. Such funding may be in lieu of the trusting
15 49 requirements of this chapter when the purchaser
15 50 assigns the proceeds of an existing insurance policy.
16 1 3. Such funding may be in lieu of the trusting
16 2 requirements of this chapter when a new insurance
16 3 policy is purchased to fund the purchase agreement,
16 4 with a face amount equal to or greater than the
16 5 current retail price of the cemetery merchandise,
16 6 funeral merchandise, and funeral services to be
16 7 delivered under the purchase agreement or, if less, a
16 8 face amount equal to the total of all payments to be
16 9 submitted by the purchaser pursuant to the purchase
16 10 agreement.
16 11 4. The premiums of any new insurance policy shall
16 12 be fully paid within thirty days after execution of
16 13 the purchase agreement or, with respect to a purchase
16 14 agreement that provides for periodic payments, the
16 15 premiums shall be paid directly by the purchaser to
16 16 the insurance company issuing the policy.
16 17 5. Any new insurance policy shall satisfy the
16 18 following conditions:
16 19 a. Except as necessary and appropriate to satisfy
16 20 the requirements regarding burial trust funds under
16 21 Title XIX of the federal Social Security Act, the
16 22 policy shall not be owned by the establishment, the
16 23 policy shall not be irrevocably assigned to the
16 24 establishment, and the assignment of proceeds from the
16 25 insurance policy to the establishment shall be limited
16 26 to the establishment's interests as they appear in the
16 27 purchase agreement, and conditioned on the
16 28 establishment's delivery of cemetery merchandise,
16 29 funeral merchandise, and funeral services pursuant to
16 30 a purchase agreement.
16 31 b. The policy shall provide that any assignment of
16 32 benefits is contingent upon the establishment's
16 33 delivery of cemetery merchandise, funeral merchandise,
16 34 and funeral services pursuant to a purchase agreement.
16 35 c. The policy shall have an increasing death
16 36 benefit or similar feature that provides some means
16 37 for increasing the funding as the cost of funeral and
16 38 cemetery goods and services increases.
16 39 6. With the written consent of the purchaser, an
16 40 existing prepaid purchase agreement with trust-funded
16 41 benefits may be converted to a prepaid purchase
16 42 agreement with insurance-funded benefits provided the
16 43 establishment and the insurance benefits comply with
16 44 the following provisions:
16 45 a. The transfer of the trust funds to the
16 46 insurance company must be at least equal to the full
16 47 sum required to be deposited as trust principal under
16 48 the trust-funded prepaid purchase agreement plus all
16 49 net earnings accumulated with respect thereto, as of
16 50 the transfer date. Commissions, allowances, surrender
17 1 charges or other forms of compensation or expense
17 2 loads, premium expense, administrative charges or
17 3 expenses, or policy fees shall not be deducted from
17 4 the trust funds transferred pursuant to the
17 5 conversion.
17 6 b. The face amount of any insurance policy issued
17 7 on an individual must be no less than the amount of
17 8 principal and interest transferred for that individual
17 9 to the insurance company, and any supplemental
17 10 insurance policy issued to cover the unfunded portion
17 11 of the purchase agreement must have a face amount that
17 12 is at least as great as the unfunded principal
17 13 balance. The face amount of the insurance purchased
17 14 shall not, under any circumstances, be less than the
17 15 total of all payments made by the purchaser pursuant
17 16 to the agreement plus all net earnings accumulated
17 17 with respect thereto, as of the transfer date.
17 18 c. The insurance policy shall not allow for
17 19 contesting coverage, limit death benefits in the case
17 20 of suicide, refer to physical examination, or
17 21 otherwise operate as an exclusion, limitation, or
17 22 condition other than requiring submission of proof of
17 23 death or surrender of policy at the time the prepaid
17 24 purchase agreement is funded, matures, or is canceled,
17 25 as the case may be.
17 26 d. The establishment shall maintain a copy of any
17 27 prepaid trust-funded purchase agreement that was
17 28 converted to a prepaid insurance-funded purchase
17 29 agreement and retain the payment history records for
17 30 each converted purchase agreement prior to conversion
17 31 until the cemetery merchandise, funeral merchandise,
17 32 and funeral services have been delivered.
17 33 7. The seller of a purchase agreement subject to
17 34 this chapter which is to be funded by insurance
17 35 proceeds shall obtain all permits required to be
17 36 obtained and comply with all reporting requirements
17 37 under this chapter.
17 38 8. An insurance company issuing policies funding
17 39 purchase agreements subject to this chapter shall file
17 40 an annual report with the commissioner on a form
17 41 prescribed by the commissioner. The report shall list
17 42 the applicable insurance policies outstanding for each
17 43 establishment. Computer printouts may be submitted so
17 44 long as each legibly provides the same information
17 45 required in the prescribed form.
17 46 Sec. . NEW SECTION. 523A.402 PURCHASE
17 47 AGREEMENTS FUNDED BY ANNUITY PROCEEDS.
17 48 1. A purchase agreement may be funded by proceeds
17 49 derived from a new or existing annuity issued by an
17 50 insurance company authorized to do business and doing
18 1 business within this state.
18 2 2. Such funding may be in lieu of the trust
18 3 requirements of this chapter when the purchaser
18 4 assigns the proceeds of an existing annuity.
18 5 3. Such funding may be in lieu of the trust
18 6 requirements of this chapter when a new annuity is
18 7 purchased to fund the purchase agreement, with a face
18 8 amount equal to or greater than the current retail
18 9 price of the cemetery merchandise, funeral
18 10 merchandise, and funeral services to be delivered
18 11 under the purchase agreement or, if less, a face
18 12 amount equal to the total of all payments to be
18 13 submitted by the purchaser pursuant to the purchase
18 14 agreement.
18 15 4. The premiums of any new annuity shall be fully
18 16 paid within thirty days after execution of the
18 17 purchase agreement or, with respect to a purchase
18 18 agreement that provides for periodic payments, the
18 19 premiums shall be paid directly by the purchaser to
18 20 the insurance company issuing the annuity.
18 21 5. The annuity shall satisfy the following
18 22 conditions:
18 23 a. Except as necessary and appropriate to satisfy
18 24 the requirements regarding burial trust funds under
18 25 Title XIX of the federal Social Security Act, the
18 26 annuity shall not be owned by the establishment or
18 27 irrevocably assigned and any designation of the
18 28 establishment as a beneficiary shall not be made
18 29 irrevocable.
18 30 b. The annuity shall provide that any assignment
18 31 of benefits is contingent upon the establishment's
18 32 delivery of cemetery merchandise, funeral merchandise,
18 33 and funeral services pursuant to a purchase agreement.
18 34 c. The annuity shall have an increasing death
18 35 benefit or similar feature that provides some means
18 36 for increasing the funding as the cost of cemetery
18 37 merchandise, funeral merchandise, and funeral services
18 38 increases.
18 39 6. With the written consent of the purchaser, an
18 40 existing prepaid purchase agreement with trust-funded
18 41 benefits may be converted to a prepaid purchase
18 42 agreement with annuity-funded benefits provided the
18 43 establishment and the annuity benefits comply with the
18 44 following provisions:
18 45 a. The transfer of the trust funds to the
18 46 insurance company must be at least equal to the full
18 47 sum required to be deposited as trust principal under
18 48 the trust-funded prepaid purchase agreement plus all
18 49 net earnings accumulated with respect thereto, as of
18 50 the transfer date. Commissions, allowances, surrender
19 1 charges or other forms of compensation or expense
19 2 loads, premium expense, administrative charges or
19 3 expenses, or fees shall not be deducted from the trust
19 4 funds transferred pursuant to the conversion.
19 5 b. The face amount of any annuity issued on an
19 6 individual must be no less than the amount of
19 7 principal and interest transferred for that individual
19 8 to the insurance company, and any supplemental annuity
19 9 issued to cover the unfunded portion of the purchase
19 10 agreement must have a face amount that is at least as
19 11 great as the unfunded principal balance. The face
19 12 amount of the annuity purchased shall not, under any
19 13 circumstances, be less than the total of all payments
19 14 made by the purchaser pursuant to the agreement plus
19 15 all net earnings accumulated with respect thereto, as
19 16 of the transfer date.
19 17 c. The annuity shall not allow for contesting
19 18 coverage, limit death benefits in the case of suicide,
19 19 refer to physical examination, or otherwise operate as
19 20 an exclusion, limitation, or condition other than
19 21 requiring submission of proof of death or surrender of
19 22 the annuity at the time the prepaid purchase agreement
19 23 is funded, matures, or is canceled, as the case may
19 24 be.
19 25 d. The establishment shall maintain a copy of any
19 26 prepaid trust-funded purchase agreement that was
19 27 converted to a prepaid annuity-funded purchase
19 28 agreement and retain the payment history records for
19 29 each converted purchase agreement prior to conversion
19 30 until the cemetery merchandise, funeral merchandise,
19 31 and funeral services have been delivered.
19 32 7. The seller of a purchase agreement subject to
19 33 this chapter which is to be funded by annuity proceeds
19 34 shall obtain all permits required to be obtained and
19 35 comply with all reporting requirements under this
19 36 chapter.
19 37 8. An insurance company issuing annuities funding
19 38 purchase agreements subject to this chapter shall file
19 39 an annual report with the commissioner on a form
19 40 prescribed by the commissioner. The report shall list
19 41 the applicable annuities outstanding for each
19 42 establishment. Computer printouts may be submitted so
19 43 long as each legibly provides the same information
19 44 required in the prescribed form.
19 45 Sec. . NEW SECTION. 523A.403 PURCHASE
19 46 AGREEMENTS FUNDED BY CERTIFICATES OF DEPOSIT.
19 47 1. A purchase agreement may be funded by proceeds
19 48 derived from a certificate of deposit in the name of
19 49 the purchaser made payable to the seller upon the
19 50 purchaser's death.
20 1 2. The seller of a purchase agreement subject to
20 2 this chapter which is to be funded by a certificate of
20 3 deposit shall obtain all permits required to be
20 4 obtained and comply with all reporting requirements
20 5 under this chapter, implementing rules, and orders.
20 6 Sec. . NEW SECTION. 523A.404 MERCHANDISE
20 7 DELIVERED TO THE PURCHASER OR WAREHOUSED.
20 8 1. Trust requirements do not apply to payments for
20 9 outer burial containers made of either polystyrene or
20 10 polypropylene or cemetery merchandise delivered to the
20 11 purchaser or stored in an independent third-party
20 12 storage facility not owned or controlled by the seller
20 13 when approved by the commissioner. The seller or the
20 14 storage facility must demonstrate that they will do
20 15 all of the following:
20 16 a. Issue a receipt of ownership in the name of the
20 17 purchaser and deliver it to the purchaser.
20 18 b. Insure the merchandise against loss.
20 19 c. Protect the merchandise against damage.
20 20 d. Transfer title to the purchaser.
20 21 e. Appropriately identify and describe the
20 22 merchandise in a manner that it can be distinguished
20 23 from other similar items.
20 24 f. Use a method of storage that allows for visual
20 25 audits of the merchandise.
20 26 g. Have adequate, computerized, recordkeeping
20 27 systems in place to identify, describe, and count each
20 28 item in storage, including the ownership of each item,
20 29 and provide an aggregate listing with numerical
20 30 totals.
20 31 h. File a consent to be audited and inspected by
20 32 the commissioner.
20 33 i. Provide reports to the commissioner, annually,
20 34 by an independent certified public accountant, which
20 35 shall include a physical count of merchandise held in
20 36 storage and a review of information, including the
20 37 seller's revenue and sales records, as necessary to
20 38 verify the adequacy of the number of items held at the
20 39 storage facility.
20 40 j. Satisfy the annual reporting requirements of
20 41 section 523A.204.
20 42 2. Lawn crypts may be delivered in lieu of
20 43 trusting. For this purpose, delivery means
20 44 installation in a grave owned by the purchaser. The
20 45 seller shall do all of the following:
20 46 a. Notify the administrator before the lawn crypts
20 47 are installed.
20 48 b. Identify the intended location of the lawn
20 49 crypts within the cemetery.
20 50 c. Provide documentation adequately demonstrating
21 1 delivery has occurred. Adequate documentation
21 2 includes but is not limited to photographs and third-
21 3 party certifications.
21 4 3. Cemetery merchandise and funeral merchandise
21 5 shall not be deemed delivered to the purchaser or
21 6 warehoused if the merchandise is subject to a lien or
21 7 security interest by any party other than the seller.
21 8 4. An establishment is prohibited from requiring
21 9 delivery as a condition of the sale.
21 10 5. A seller shall provide services necessary for
21 11 the installation or burial of outer burial containers
21 12 sold by the seller. This subsection shall not require
21 13 the seller to provide for the opening or closing of
21 14 the interment or entombment space, unless the purchase
21 15 agreement provides otherwise.
21 16 Sec. . NEW SECTION. 523A.405 BOND IN LIEU OF
21 17 TRUST FUND.
21 18 1. In lieu of trust requirements, a seller may
21 19 file with the commissioner a surety bond issued by a
21 20 surety company authorized to do business and doing
21 21 business within this state. The bond must be
21 22 conditioned upon the seller's faithful performance of
21 23 purchase agreements subject to this chapter. The
21 24 surety's liability extends to each such agreement
21 25 executed while the bond is in force and until
21 26 performance or recision of the purchase agreement. To
21 27 the extent expressly agreed to in writing by the
21 28 surety, the surety's liability extends to each such
21 29 agreement subject to this chapter executed prior to
21 30 the time the bond was in force and until performance
21 31 or recision of the agreement. A purchaser aggrieved
21 32 by a breach of a condition of the bond covering the
21 33 purchaser's agreement may maintain an action against
21 34 the bond. If, at the time of the breach, the
21 35 purchaser is aware of the purchaser's rights under the
21 36 bond and how to file a claim against the bond, the
21 37 surety shall not be liable for any breach of condition
21 38 unless the surety receives notice of a claim within
21 39 sixty days following discovery of the acts, omissions,
21 40 or conditions constituting the breach of condition,
21 41 except as otherwise provided in this section. A
21 42 surety bond shall not be canceled by a surety except
21 43 upon a written notice of cancellation given by the
21 44 surety to the commissioner by restricted certified
21 45 mail, and not prior to the expiration of sixty days
21 46 after receipt of the notice by the commissioner. The
21 47 surety's liability shall extend to each purchase
21 48 agreement subject to this chapter executed prior to
21 49 cancellation of the surety bond until the seller has
21 50 complied with section 3.
22 1 2. If a seller becomes insolvent or otherwise
22 2 ceases to engage in business prior to or within sixty
22 3 days after cancellation of a bond, the seller shall be
22 4 deemed to have breached the bond conditions for
22 5 outstanding agreements under this chapter as of the
22 6 day prior to cancellation of the bond. The
22 7 commissioner shall mail written notice by restricted
22 8 certified mail to the purchaser under each outstanding
22 9 purchase agreement of the seller that a claim against
22 10 the bond must be filed with the surety company within
22 11 sixty days after the mailing date of the notice. The
22 12 surety shall cease to be liable for all purchase
22 13 agreements except those for which claims are filed
22 14 with the surety company within sixty days after the
22 15 date the commissioner mails the notices.
22 16 3. If a surety bond is canceled by a surety under
22 17 any conditions other than those specified in
22 18 subsection 2, the seller shall comply with all of the
22 19 following:
22 20 a. The seller shall comply with the trust
22 21 requirements of section 523A.201 for all purchase
22 22 agreements subject to this chapter executed on or
22 23 after the effective date of cancellation of the surety
22 24 bond. In the alternative, the seller may submit a
22 25 substitute surety bond meeting the requirements of
22 26 subsection 1, but the seller must comply with section
22 27 523A.201 for any purchase agreements executed on or
22 28 after the effective cancellation date of the earlier
22 29 surety bond and prior to the effective date of the
22 30 later surety bond.
22 31 b. Within sixty days after the effective
22 32 cancellation date of the surety bond, the seller shall
22 33 submit to the commissioner an undertaking by another
22 34 surety company that a substitute surety bond meeting
22 35 the requirements of subsection 1 is in effect and that
22 36 the liability of the substitute surety bond extends to
22 37 all outstanding purchase agreements of the seller that
22 38 were executed but not performed or extinguished prior
22 39 to the effective date of the substitute surety bond,
22 40 or the seller shall submit to the commissioner a
22 41 financial statement accompanied by an unqualified
22 42 opinion based upon an audit performed by a certified
22 43 public accountant licensed in this state certifying
22 44 the total amount of outstanding liabilities of the
22 45 seller on purchase agreements subject to this chapter
22 46 and proof of deposit by the seller in trust under
22 47 section 523A.201 of either the amount specified in
22 48 section 523A.201, including interest as set by the
22 49 commissioner based on the interest which would have
22 50 been earned had the funds been maintained in trust,
23 1 with respect to all of those outstanding purchase
23 2 agreements or, where applicable, that delivery of
23 3 merchandise has been made in compliance with section
23 4 523A.404. The surety may require such security as is
23 5 necessary to comply with this section. Upon
23 6 compliance by the seller with this paragraph, the
23 7 surety company canceling the surety bond shall cease
23 8 to be liable with respect to any outstanding purchase
23 9 agreements of the seller except those purchase
23 10 agreements with respect to which a breach of condition
23 11 occurred prior to cancellation and for which timely
23 12 claims were filed.
23 13 4. Section 523A.202, and, to the extent it is
23 14 applicable, section 523A.206, apply to sellers whose
23 15 purchase agreements are covered by a surety bond
23 16 maintained under this section, and section 523A.202
23 17 continues to apply to any purchase agreements of those
23 18 sellers that are not covered by a surety bond
23 19 maintained under this section.
23 20 5. Upon receiving a notice of cancellation of a
23 21 surety bond, the commissioner shall notify the seller
23 22 of the requirements of this chapter resulting from
23 23 cancellation of the bond. The notice may be in the
23 24 form of a copy of this section and sections 523A.201
23 25 and 523A.202.
23 26 6. Upon receiving a notice of cancellation, unless
23 27 the seller has complied with the requirements of this
23 28 section, the attorney general shall seek an injunction
23 29 to prohibit the seller from making further purchase
23 30 agreements subject to this chapter. The attorney
23 31 general shall commence an action to attach and levy
23 32 execution upon property of the seller when the seller
23 33 fails to perform a purchase agreement subject to this
23 34 chapter, to the extent necessary to secure compliance
23 35 with this chapter. The county attorney may bring
23 36 criminal charges under subchapter 7.
23 37 7. The surety under this section shall not be
23 38 owned, under the control of, or affiliated with the
23 39 seller.
23 40 8. The amount of the surety bond shall equal
23 41 eighty percent of the payments received pursuant to
23 42 purchase agreements, or the applicable portion
23 43 thereof, for cemetery merchandise, funeral
23 44 merchandise, funeral services, or a combination
23 45 thereof and the amount needed to adjust the amount of
23 46 the surety bond for inflation as set by the
23 47 commissioner based on the consumer price index. The
23 48 seller shall review the amount of the surety bond no
23 49 less than annually and shall increase the bond as
23 50 necessary to reflect additional payments. The amount
24 1 needed to adjust for inflation shall be added annually
24 2 to the surety bond during the first quarter of the
24 3 establishment's fiscal year.
24 4 9. With the consent of the purchaser, an existing
24 5 prepaid purchase agreement with trust-funded benefits
24 6 may be converted to a prepaid purchase agreement
24 7 funded by a surety bond provided the establishment and
24 8 the surety bond comply with the following provisions:
24 9 a. The amount of the trust funds transferred to
24 10 the surety company must be at least equal to the full
24 11 sum required to be deposited as trust principal under
24 12 the trust-funded prepaid purchase agreement plus all
24 13 net earnings accumulated with respect thereto, as of
24 14 the transfer date. Commissions, allowances, surrender
24 15 charges or other forms of compensation or expense
24 16 loads, premium expense, administrative charges or
24 17 expenses, or fees shall not be deducted from the trust
24 18 funds transferred pursuant to the conversion.
24 19 b. The face amount of the surety bond issued on an
24 20 individual must be no less than the amount of
24 21 principal and interest transferred for that individual
24 22 to the surety company, and any supplemental surety
24 23 bond issued to cover the unfunded portion of the
24 24 purchase agreement must have a face amount that is at
24 25 least as great as the unfunded principal balance. The
24 26 face amount of the surety bond purchased shall not,
24 27 under the circumstances, be less than the total of all
24 28 payments made by the purchaser pursuant to the
24 29 agreement plus all net earnings accumulated with
24 30 respect thereto, as of the transfer date.
24 31 c. The establishment shall maintain a copy of any
24 32 prepaid trust-funded agreement that was converted to a
24 33 prepaid purchase agreement funded by a surety bond and
24 34 retain the payment history records for each converted
24 35 purchase agreement prior to conversion until the
24 36 cemetery merchandise, funeral merchandise, and funeral
24 37 services have been delivered.
24 38 SUBCHAPTER 5
24 39 PERMIT REQUIREMENTS FOR SELLERS OF CEMETERY
24 40 MERCHANDISE, FUNERAL MERCHANDISE, FUNERAL SERVICES,
24 41 OR A COMBINATION THEREOF
24 42 Sec. . NEW SECTION. 523A.501 ESTABLISHMENT
24 43 PERMITS.
24 44 1. A person shall not advertise, sell, promote, or
24 45 offer to furnish cemetery merchandise, funeral
24 46 merchandise, funeral services, or a combination
24 47 thereof when performance or delivery may be more than
24 48 one hundred twenty days following the initial payment
24 49 on the account without an establishment permit. Each
24 50 establishment must have an establishment permit.
25 1 2. An application for an establishment permit
25 2 shall be filed on a form prescribed by the
25 3 commissioner, be accompanied by a fifty dollar filing
25 4 fee, and include a copy of each purchase agreement the
25 5 person will use for sales of cemetery merchandise,
25 6 funeral merchandise, funeral services, or a
25 7 combination thereof.
25 8 3. The application shall contain:
25 9 a. The name and address of the establishment.
25 10 b. The name and address of any additional provider
25 11 of cemetery merchandise, funeral merchandise, funeral
25 12 services, or a combination thereof.
25 13 c. The name and address of each owner, officer, or
25 14 other official of the establishment, including when
25 15 relevant the chief executive officer and the members
25 16 of the board of directors.
25 17 d. A description of any common business enterprise
25 18 or parent company.
25 19 e. The types of cemetery merchandise, funeral
25 20 merchandise, funeral services, or a combination
25 21 thereof to be sold.
25 22 f. The types of trust or trust alternatives
25 23 utilized by the establishment and a list of the
25 24 financial institutions, storage facilities, surety
25 25 companies, and insurance companies utilized by the
25 26 establishment on a regular basis.
25 27 4. A permit holder shall inform the commissioner
25 28 of changes in the information required to be provided
25 29 by subsection 3 within thirty days of the change.
25 30 5. An establishment permit is not assignable or
25 31 transferable. A permit holder selling all or part of
25 32 an establishment shall cancel the permit and the
25 33 purchaser shall apply for a new permit in the
25 34 purchaser's name within thirty days of the sale.
25 35 6. The commissioner shall grant or deny a permit
25 36 application within thirty days after receipt, but the
25 37 commissioner's failure to act within that time period
25 38 shall not be deemed approval of the application. If
25 39 the commissioner does not grant the permit, the
25 40 commissioner shall notify the person in writing of the
25 41 reasons for the denial. The permit shall disclose on
25 42 its face the permit holder's employer or the
25 43 establishment on whose behalf the applicant will be
25 44 making or attempting to make sales, the permit number,
25 45 and the expiration date.
25 46 7. An initial permit is valid for two years from
25 47 the date the application is filed. A permit may be
25 48 renewed for two years by filing the form prescribed by
25 49 the commissioner under subsection 2, accompanied by a
25 50 ten dollar renewal fee. Submission of purchase
26 1 agreements is not required for renewals unless the
26 2 purchase agreements have been modified since the last
26 3 filing.
26 4 8. The commissioner may by rule create or accept a
26 5 multijurisdiction establishment permit. If the
26 6 establishment permit is issued by another
26 7 jurisdiction, the rules shall require the filing of an
26 8 application or notice form and payment of the
26 9 applicable filing fee of fifty dollars for an initial
26 10 application and ten dollars for a renewal application.
26 11 The application or notice form utilized and the
26 12 effective dates and terms of the permit may vary from
26 13 the provisions set forth in subsections 2, 3, and 7.
26 14 Sec. . NEW SECTION. 523A.502 SALES PERMITS.
26 15 1. A person shall not advertise, sell, promote, or
26 16 offer to furnish cemetery merchandise, funeral
26 17 merchandise, funeral services, or a combination
26 18 thereof when performance or delivery may be more than
26 19 one hundred twenty days following initial payment on
26 20 the account without a sales permit. A permit holder
26 21 must be an employee or agent of a person holding an
26 22 establishment permit who can deliver the cemetery
26 23 merchandise, funeral merchandise, funeral services, or
26 24 a combination thereof being sold. A person must have
26 25 a sales permit for each establishment at which the
26 26 person works. However, a person may apply for a sales
26 27 permit covering multiple establishments, if the
26 28 establishments have common ownership. The
26 29 establishment permit holder is liable for the acts of
26 30 its employees and agents performed in advertising,
26 31 selling, promoting, or offering to furnish, upon the
26 32 future death of a person named or implied in a
26 33 purchase agreement, cemetery merchandise, funeral
26 34 merchandise, funeral services, or a combination
26 35 thereof.
26 36 2. This chapter does not permit a person to
26 37 practice mortuary science without a license. A person
26 38 holding a current sales permit may advertise, sell,
26 39 promote, or offer to furnish a funeral director's
26 40 services as an employee or agent of a funeral
26 41 establishment furnishing the funeral services under
26 42 chapter 156.
26 43 3. An application for a sales permit shall be
26 44 filed on a form prescribed by the commissioner and be
26 45 accompanied by a five dollar filing fee.
26 46 4. The application shall contain:
26 47 a. The name and address of the person.
26 48 b. The name and address of the person's employer
26 49 and each establishment on whose behalf the person will
26 50 be advertising, selling, promoting, or offering to
27 1 furnish cemetery merchandise, funeral merchandise,
27 2 funeral services, or a combination thereof.
27 3 c. The name and address of the provider who will
27 4 provide the cemetery merchandise, funeral merchandise,
27 5 funeral services, or a combination thereof if
27 6 different from the person's employer.
27 7 5. An initial permit expires one year from the
27 8 date the application is filed. The permit may be
27 9 renewed for four years by filing the form prescribed
27 10 by the commissioner under subsection 3, accompanied by
27 11 a twenty dollar filing fee.
27 12 6. A permit holder shall inform the commissioner
27 13 of changes in the information required to be provided
27 14 by subsection 4 within thirty days of the change.
27 15 7. A sales permit is not assignable or
27 16 transferable. A permit holder selling all or part of
27 17 a business shall cancel the permit and the purchaser
27 18 shall apply for a new permit in the purchaser's name
27 19 within thirty days of the sale.
27 20 8. The commissioner shall grant or deny a permit
27 21 application within thirty days after receipt, but the
27 22 commissioner's failure to act within that time period
27 23 shall not be deemed approval of the application. If
27 24 the commissioner does not grant the permit, the
27 25 commissioner shall notify the applicant in writing of
27 26 the reasons for the denial.
27 27 9. The commissioner may by rule create or accept a
27 28 multijurisdiction sales permit. If the sales permit
27 29 is issued by another jurisdiction, the rules shall
27 30 require the filing of an application or notice form
27 31 and payment of the applicable filing fee of five
27 32 dollars for each year. The application or notice form
27 33 utilized and the effective dates and terms of the
27 34 permit may vary from the provisions set forth in
27 35 subsections 3 and 5.
27 36 Sec. . NEW SECTION. 523A.503 DENIAL,
27 37 SUSPENSION, REVOCATION, AND SURRENDER OF PERMITS.
27 38 1. The commissioner may, pursuant to chapter 17A,
27 39 deny any permit application or immediately suspend or
27 40 revoke any permit issued under this chapter for
27 41 several reasons, including but not limited to:
27 42 a. Committing a fraudulent act, engaging in a
27 43 fraudulent practice, or violating any provision of
27 44 this chapter or, any implementing rule or order issued
27 45 under this chapter.
27 46 b. Violating any other state or federal law
27 47 applicable to the conduct of the applicant's or permit
27 48 holder's business.
27 49 c. Insolvency or financial condition.
27 50 d. The permit holder, for the purpose of avoiding
28 1 the trust requirement for funeral services, attributes
28 2 amounts paid under the purchase agreement to cemetery
28 3 merchandise or funeral merchandise that is delivered
28 4 under section 523A.404 rather than to funeral services
28 5 sold to the purchaser. The sale of funeral services
28 6 at a lower price when the sale is made in conjunction
28 7 with the sale of cemetery merchandise or funeral
28 8 merchandise to be delivered under section 523A.404
28 9 than the services are regularly and customarily sold
28 10 for when not sold in conjunction with cemetery
28 11 merchandise or funeral merchandise is evidence that
28 12 the permit holder is acting with the purpose of
28 13 avoiding the trust requirement for funeral services
28 14 under section 523A.201.
28 15 e. Engaging in a deceptive act or practice or
28 16 deliberately misrepresenting or omitting a material
28 17 fact regarding the sale of cemetery merchandise,
28 18 funeral merchandise, funeral services, or a
28 19 combination thereof under this chapter.
28 20 f. Conviction of a criminal offense involving
28 21 dishonesty or a false statement.
28 22 g. Inability to provide the cemetery merchandise,
28 23 funeral merchandise, funeral services, or a
28 24 combination thereof which the applicant or permit
28 25 holder purports to sell.
28 26 h. The applicant or permit holder sells the
28 27 business without filing a prior notice of sale with
28 28 the commissioner. The permit shall be revoked thirty
28 29 days following such sale.
28 30 i. Selling by a person who is not an employee or
28 31 agent of the applicant or permit holder.
28 32 2. The commissioner may, for good cause shown,
28 33 suspend any permit for a period not exceeding thirty
28 34 days, pending investigation.
28 35 3. Except as provided in subsection 2, a permit
28 36 shall not be revoked or suspended except after notice
28 37 and hearing under chapter 17A.
28 38 4. Any permit holder may surrender a permit by
28 39 delivering to the commissioner written notice that the
28 40 permit holder surrenders the permit, but the surrender
28 41 shall not affect the permit holder's civil or criminal
28 42 liability for acts committed before the surrender.
28 43 5. Denial, revocation, suspension, or surrender of
28 44 a permit does not impair or affect the obligation of
28 45 any preexisting lawful agreement between the permit
28 46 holder and any person.
28 47 SUBCHAPTER 6
28 48 PURCHASE AGREEMENT REQUIREMENTS
28 49 Sec. . NEW SECTION. 523A.601 DISCLOSURES.
28 50 1. A purchase agreement for cemetery merchandise,
29 1 funeral merchandise, funeral services, or a
29 2 combination thereof shall be written in clear,
29 3 understandable language, and shall be printed or typed
29 4 in an easy-to-read font, size, and style, and shall:
29 5 a. Identify the seller, the salesperson's permit
29 6 and establishment name and permit number, the
29 7 expiration date of the salesperson's permit, the
29 8 purchaser, and the person for whom the cemetery
29 9 merchandise, funeral merchandise, funeral services, or
29 10 a combination thereof is purchased, if other than the
29 11 purchaser.
29 12 b. Specify the cemetery merchandise, funeral
29 13 merchandise, funeral services, or a combination
29 14 thereof, to be provided, and the cost of each
29 15 merchandise item or service.
29 16 c. State clearly the conditions upon which
29 17 substitution will be allowed.
29 18 d. State the total purchase price and the terms
29 19 under which it is to be paid.
29 20 e. State clearly whether the purchase agreement is
29 21 a guaranteed price agreement or a nonguaranteed price
29 22 agreement. A nonguaranteed price agreement shall
29 23 contain in twelve point bold-faced type an explanation
29 24 of the consequences of such agreement in substantially
29 25 the following language:
29 26 THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS
29 27 AGREEMENT ARE SUBJECT TO CHANGE IN THE FUTURE. ANY
29 28 FUNDS PAID UNDER THIS AGREEMENT ARE ONLY A DEPOSIT TO
29 29 BE APPLIED, TOGETHER WITH ACCRUED INCOME, TOWARD THE
29 30 FINAL COSTS OF THE MERCHANDISE OR SERVICES AGREED
29 31 UPON. ADDITIONAL CHARGES MAY BE INCURRED WHEN
29 32 ADDITIONAL MERCHANDISE OR SERVICES OR BOTH ARE
29 33 PROVIDED OR WHEN PRICES HAVE INCREASED MORE THAN
29 34 ACCRUED INCOME.
29 35 f. State that the purchase of the cemetery
29 36 merchandise, funeral merchandise, and funeral services
29 37 is revocable and specify the damages for cancellation,
29 38 if any.
29 39 g. State clearly who has the authority to cancel,
29 40 amend, or revoke the purchase agreement to purchase
29 41 cemetery merchandise, funeral merchandise, and funeral
29 42 services.
29 43 h. State clearly that the purchaser is entitled to
29 44 rescind the purchase agreement under terms and
29 45 conditions specified by section 523A.602.
29 46 i. Include an explanation of regulatory oversight
29 47 by the insurance division in twelve point bold-faced
29 48 type, in substantially the following language:
29 49 THIS AGREEMENT IS SUBJECT TO RULES ADMINISTERED BY
29 50 THE IOWA INSURANCE DIVISION. YOU MAY CALL THE
30 1 INSURANCE DIVISION AT (___) ________. WRITTEN
30 2 INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE IOWA
30 3 SECURITIES BUREAU, (STREET ADDRESS), (CITY), IOWA (ZIP
30 4 CODE).
30 5 2. A purchase agreement that is funded by a trust
30 6 shall also:
30 7 a. State the percentage of money to be placed in
30 8 trust.
30 9 b. Explain the disposition of the income generated
30 10 from investments and include a statement of the
30 11 purchaser's responsibility for income taxes owed on
30 12 the income if applicable.
30 13 c. State that if, after all payments are made
30 14 under the conditions and terms of the purchase
30 15 agreement for cemetery merchandise, funeral
30 16 merchandise, funeral services, or a combination
30 17 thereof, any funds remain in the nonguaranteed
30 18 irrevocable burial trust fund, the seller shall
30 19 disburse the remaining funds according to law.
30 20 d. State clearly the terms of the funeral and
30 21 burial trust agreement and whether it is revocable or
30 22 irrevocable.
30 23 e. State clearly that the purchaser is entitled to
30 24 transfer the trust funding, insurance funding, or
30 25 other trust assets or select another establishment to
30 26 receive the trust funding, insurance funding, or any
30 27 other trust assets.
30 28 f. State clearly who has the authority to amend or
30 29 revoke the trust agreement, if revocable, and who has
30 30 the authority to appoint successor trustees if the
30 31 purchase agreement is canceled.
30 32 3. The commissioner may adopt rules establishing
30 33 disclosure and format requirements to promote consumer
30 34 understanding of the merchandise and services
30 35 purchased and the available funding mechanisms for a
30 36 purchase agreement under this chapter.
30 37 4. A purchase agreement shall be signed by the
30 38 purchaser, the seller, and if the agreement is for
30 39 funeral services as defined in chapter 156, a person
30 40 licensed to deliver funeral services.
30 41 5. The seller shall disclose the following
30 42 information prior to accepting the initial payment
30 43 under a purchase agreement:
30 44 a. The specific method or methods (trust deposits,
30 45 certificates of deposit, life insurance or an annuity,
30 46 a surety bond, or warehousing) that will be used to
30 47 fund the purchase agreement.
30 48 b. The relationship between the soliciting agent
30 49 or agents, the provider of the cemetery merchandise,
30 50 funeral merchandise, or funeral services, or
31 1 combination thereof, the commissioner, and any other
31 2 person.
31 3 c. The relationship of the life insurance policy
31 4 or other trust assets to the funding of the purchase
31 5 agreement and the nature and existence of any
31 6 guarantees regarding the purchase agreement.
31 7 d. The impact on the purchase agreement of the
31 8 following:
31 9 (1) Changes in the funding, including but not
31 10 limited to changes in the assignment, beneficiary
31 11 designation, trustee, or use of proceeds.
31 12 (2) Any penalties to be incurred by the purchaser
31 13 as a result of the failure to make any additional
31 14 payments required.
31 15 (3) Penalties to be incurred upon cancellation.
31 16 e. A list of cemetery merchandise, funeral
31 17 merchandise, and funeral services which are agreed
31 18 upon under the purchase agreement and all relevant
31 19 information concerning the price of the cemetery
31 20 merchandise, funeral merchandise, funeral services, or
31 21 a combination thereof, including a statement that the
31 22 purchase price is either guaranteed at the time of
31 23 purchase or to be determined at the time of need.
31 24 f. All relevant information concerning what occurs
31 25 and whether any entitlements or obligations arise if
31 26 there is a difference between the funding and the
31 27 amount actually needed to fund the purchase agreement.
31 28 g. Any penalties or restrictions including but not
31 29 limited to geographic restrictions or the inability of
31 30 the provider to perform, upon delivery of cemetery
31 31 merchandise, funeral merchandise, or funeral services,
31 32 or the purchase agreement guarantee.
31 33 h. If the funding is being transferred from
31 34 another establishment, any material facts related to
31 35 the revocation of the prior purchase agreement and the
31 36 transfer of the existing trust funds.
31 37 Sec. . NEW SECTION. 523A.602 CONSUMER
31 38 RECISION, CANCELLATION, AND REFUND RIGHTS, AND
31 39 PURCHASE AGREEMENT COMPLIANCE WITH OTHER LAWS.
31 40 1. A seller shall furnish the purchaser with a
31 41 completed copy of a purchase agreement pertaining to
31 42 the sale at the time the purchase agreement is signed.
31 43 The seller shall comply with the following terms:
31 44 a. The same language shall be used in both the
31 45 oral sales representation and the written purchase
31 46 agreement.
31 47 b. The seller shall give notice in the purchase
31 48 agreement of the purchaser's right to rescind after
31 49 signing the purchase agreement. The recision period
31 50 must be but may be greater than three business days
32 1 after the date of the purchase agreement. The notice
32 2 must:
32 3 (1) Be located close to the signature line.
32 4 (2) Be printed in twelve point bold-faced type.
32 5 (3) State that "YOU, THE PURCHASER, HAVE THE RIGHT
32 6 TO RESCIND THIS AGREEMENT AT ANY TIME PRIOR TO
32 7 MIDNIGHT OF THE (INSERT RELEVANT NUMBER, NOT LESS THAN
32 8 THREE) BUSINESS DAYS AFTER THE DATE OF THIS
32 9 AGREEMENT."
32 10 c. All moneys shall be refunded without penalty
32 11 within ten days after recision.
32 12 2. CANCELLATION REFUND.
32 13 a. A purchase agreement must include a statement
32 14 that the purchaser has the right to cancel the
32 15 agreement for the purchase of cemetery merchandise,
32 16 funeral merchandise, and funeral services upon written
32 17 demand and designate or appoint a trustee to hold,
32 18 manage, invest, and distribute the trust assets.
32 19 b. If a purchase agreement is canceled, a
32 20 purchaser requests a transfer of the trust assets upon
32 21 cancellation of a purchase agreement, or another
32 22 establishment provides merchandise or services
32 23 designated in a purchase agreement, the seller shall
32 24 refund or transfer within thirty days of receiving a
32 25 written demand no less than the purchase price of the
32 26 applicable cemetery merchandise, funeral merchandise,
32 27 and funeral services adjusted for inflation, using the
32 28 consumer price index amounts announced by the
32 29 commissioner annually, less any cancellation penalty
32 30 set forth in the purchase agreement. The amount of
32 31 the cancellation penalty shall not exceed ten percent
32 32 of the purchase price of the applicable cemetery
32 33 merchandise, funeral merchandise, and funeral
32 34 services. The seller may also deduct the value of the
32 35 cemetery merchandise, funeral merchandise, and funeral
32 36 services already received by, delivered to, or
32 37 warehoused for the purchaser.
32 38 c. A purchase agreement must include a statement
32 39 that the purchaser is entitled to a refund of the
32 40 purchase price of the applicable funeral merchandise
32 41 adjusted for inflation, using the consumer price index
32 42 amounts announced by the commissioner annually for any
32 43 item of funeral merchandise that cannot be delivered
32 44 to the location specified in the purchase agreement
32 45 within forty-eight hours of notice of the individual's
32 46 death, unless the delay is caused by weather
32 47 conditions or a natural disaster. The seller must
32 48 return such refund to the purchaser within thirty days
32 49 of receiving the written demand.
32 50 3. This section does not prohibit a purchaser who
33 1 is or may become eligible for benefits under Title XIX
33 2 of the federal Social Security Act from making a
33 3 guaranteed price purchase agreement irrevocable to the
33 4 extent that federal law or regulations require that
33 5 such an agreement be irrevocable for purposes of a
33 6 purchaser's eligibility for benefits under Title XIX
33 7 of the federal Social Security Act, as permitted under
33 8 federal law. The seller of credit sale agreements
33 9 shall comply with the requirements of chapter 537, the
33 10 Iowa consumer credit code, and is subject to the
33 11 remedies and penalties provided in that chapter for
33 12 noncompliance.
33 13 SUBCHAPTER 7
33 14 FRAUDULENT PRACTICES
33 15 Sec. . NEW SECTION. 523A.701 MISLEADING
33 16 FILINGS.
33 17 It is unlawful for a person to make or cause to be
33 18 made, in any document filed with the commissioner, or
33 19 in any proceeding under this chapter, any statement of
33 20 material fact which is, at the time and in the light
33 21 of the circumstances under which it is made, false or
33 22 misleading, or, in connection with such statement, to
33 23 omit to state a material fact necessary in order to
33 24 make the statements made, in the light of the
33 25 circumstances under which they are made, not
33 26 misleading.
33 27 Sec. . NEW SECTION. 523A.702
33 28 MISREPRESENTATIONS OF GOVERNMENT APPROVAL.
33 29 It is unlawful for a seller under this chapter to
33 30 represent or imply in any manner that the seller has
33 31 been sponsored, recommended, or approved, or that the
33 32 seller's abilities or qualifications have in any
33 33 respect been passed upon by the commissioner.
33 34 Sec. . NEW SECTION. 523A.703 FRAUDULENT
33 35 PRACTICES.
33 36 A person who commits any of the following acts
33 37 commits a fraudulent practice and is punishable as
33 38 provided in chapter 714:
33 39 1. Knowingly fails to comply with any requirement
33 40 of this chapter.
33 41 2. Knowingly makes, causes to be made, or
33 42 subscribes to a false statement or representation in a
33 43 report or other document required under this chapter,
33 44 implementing rules, or orders, or renders such a
33 45 report or document misleading through the deliberate
33 46 omission of information properly belonging in the
33 47 report or document.
33 48 3. Conspires to defraud in connection with the
33 49 sale of cemetery merchandise, funeral merchandise,
33 50 funeral services, or a combination thereof under this
34 1 chapter.
34 2 4. Fails to deposit funds under sections 523A.201
34 3 and 523A.202 or withdraws any funds in a manner
34 4 inconsistent with this chapter.
34 5 5. Knowingly sells or offers cemetery merchandise,
34 6 funeral merchandise, funeral services, or a
34 7 combination thereof without an establishment permit.
34 8 6. Deliberately misrepresents or omits a material
34 9 fact relative to the sale of cemetery merchandise,
34 10 funeral merchandise, funeral services, or a
34 11 combination thereof under this chapter. When selling
34 12 cemetery merchandise or funeral merchandise, a seller
34 13 shall not exclude the funeral services necessary for
34 14 the delivery, use, or installation of the cemetery
34 15 merchandise or funeral merchandise at the time of the
34 16 funeral or burial unless the purchase agreement
34 17 expressly provides otherwise.
34 18 SUBCHAPTER 8
34 19 ADMINISTRATION AND ENFORCEMENT
34 20 Sec. . NEW SECTION. 523A.801 ADMINISTRATION.
34 21 1. This chapter shall be administered by the
34 22 commissioner. The deputy administrator appointed
34 23 pursuant to section 502.601 shall be the principal
34 24 operations officer responsible to the commissioner for
34 25 the routine administration of this chapter and
34 26 management of the administrative staff. In the
34 27 absence of the commissioner, whether because of
34 28 vacancy in the office due to absence, physical
34 29 disability, or other cause, the deputy administrator
34 30 shall, for the time being, have and exercise the
34 31 authority conferred upon the commissioner. The
34 32 commissioner may by order from time to time delegate
34 33 to the deputy administrator any or all of the
34 34 functions assigned to the commissioner in this
34 35 chapter. The deputy administrator shall employ
34 36 officers, attorneys, accountants, and other employees
34 37 as needed for administering this chapter.
34 38 2. It is unlawful for the commissioner or any
34 39 administrative staff to use for personal benefit any
34 40 information which is filed with or obtained by the
34 41 commissioner and which is not made public. This
34 42 chapter does not authorize the commissioner or any
34 43 such staff member to disclose any such information
34 44 except among themselves or to other cemetery and
34 45 funeral administrators, regulatory authorities, or
34 46 governmental agencies, or when necessary and
34 47 appropriate in a proceeding or investigation under
34 48 this chapter or as required by chapter 22. This
34 49 chapter neither creates nor derogates any privileges
34 50 that exist at common law or otherwise when documentary
35 1 or other evidence is sought under a subpoena directed
35 2 to the commissioner or any administrative staff.
35 3 Sec. . NEW SECTION. 523A.802 SCOPE.
35 4 1. This chapter applies to any advertisement,
35 5 sale, promotion, or offer made by a person to furnish,
35 6 upon the future death of a person named or implied in
35 7 a purchase agreement, cemetery merchandise, funeral
35 8 merchandise, funeral services, or a combination
35 9 thereof. Burial accounts and insurance policies are
35 10 included if the account records or related documents
35 11 identify the establishment that will provide the
35 12 cemetery merchandise, funeral merchandise, funeral
35 13 services, or a combination thereof.
35 14 2. This chapter applies when a purchase agreement
35 15 is executed within this state or an advertisement,
35 16 promotion, or offer to furnish is made or accepted
35 17 within this state. An offer to furnish is made within
35 18 this state, whether or not either party is then
35 19 present in this state, when the offer originates from
35 20 this state or is directed by the offeror to this state
35 21 and received by the offeree in this state through the
35 22 mail, over the telephone, by the internet, or through
35 23 any other means of commerce.
35 24 3. If a foreign person does not have a registered
35 25 agent or agents in the state of Iowa, doing business
35 26 within this state shall constitute the person's
35 27 appointment of the secretary of state of the state of
35 28 Iowa to be its true and lawful attorney upon whom may
35 29 be served all lawful process of original notice in
35 30 actions or proceedings arising or growing out of any
35 31 contract or tort.
35 32 Sec. . NEW SECTION. 523A.803 INVESTIGATIONS
35 33 AND SUBPOENAS.
35 34 1. The commissioner may, for the purpose of
35 35 discovering violations of this chapter, implementing
35 36 rules, or orders issued under this chapter:
35 37 a. Make such public or private investigations
35 38 within or outside of this state as the commissioner
35 39 deems necessary to determine whether any person has
35 40 violated or is about to violate this chapter,
35 41 implementing rules, or orders issued under this
35 42 chapter, or to aid in enforcement of this chapter or
35 43 in the prescribing of rules and forms under this
35 44 chapter.
35 45 b. Require or permit any person to file a
35 46 statement in writing, under oath or otherwise as the
35 47 commissioner or attorney general determines, as to all
35 48 the facts and circumstances concerning the matter to
35 49 be investigated.
35 50 c. Notwithstanding chapter 22, keep confidential
36 1 the information obtained in the course of an
36 2 investigation. However, if the commissioner
36 3 determines that it is necessary or appropriate in the
36 4 public interest or for the protection of the public,
36 5 the commissioner may share information with other
36 6 administrators, regulatory authorities, or
36 7 governmental agencies, or may publish information
36 8 concerning a violation of this chapter, implementing
36 9 rules, or orders issued under this chapter.
36 10 d. Investigate the establishment and examine the
36 11 books, accounts, papers, correspondence, memoranda,
36 12 purchase agreements, files, or other documents or
36 13 records used by every applicant and permit holder
36 14 under this chapter.
36 15 e. Administer oaths and affirmations, subpoena
36 16 witnesses, compel their attendance, take evidence, and
36 17 require the production of any books, accounts, papers,
36 18 correspondence, memoranda, purchase agreements, files,
36 19 or other documents or records which the commissioner
36 20 deems relevant or material to any investigation or
36 21 proceeding under this chapter and implementing rules,
36 22 all of which may be enforced under chapter 17A.
36 23 f. Apply to the district court for an order
36 24 requiring a person's appearance before the
36 25 commissioner or attorney general, or a designee of
36 26 either or both, in cases where the person has refused
36 27 to obey a subpoena issued by the commissioner or
36 28 attorney general. The person may also be required to
36 29 produce documentary evidence germane to the subject of
36 30 the investigation. Failure to obey a court order
36 31 under this subsection constitutes contempt of court.
36 32 2. The commissioner may issue and bring an action
36 33 in district court to enforce subpoenas within this
36 34 state at the request of an agency or administrator of
36 35 another state, if the activity constituting an alleged
36 36 violation for which the information is sought would be
36 37 a violation of this chapter had the activity occurred
36 38 in this state.
36 39 Sec. . NEW SECTION. 523A.804 MEDIATION.
36 40 The commissioner may order an establishment to
36 41 participate in mediation in any dispute regarding a
36 42 purchase agreement. Mediation performed under this
36 43 section shall be conducted by a mediator appointed by
36 44 the commissioner and shall comply with the provisions
36 45 of chapter 679C.
36 46 Mediation of these disputes shall include
36 47 attendance at a mediation session with the mediator
36 48 and the parties to the dispute, listening to the
36 49 mediator's explanation of the mediation process,
36 50 presentation of one party's view of the dispute, and
37 1 listening to the response of the other party.
37 2 Participation in mediation does not require that the
37 3 parties reach a mediation agreement.
37 4 Parties to the mediation shall have the right to
37 5 advice and presence of counsel at all times. The
37 6 parties to the mediation shall present any mediation
37 7 agreement reached through the mediation to the
37 8 commissioner. If a mediation agreement is not
37 9 reached, the mediator shall file a report with the
37 10 commissioner. The costs of the mediation shall be
37 11 approved by the commissioner and shall be borne by the
37 12 insurance division's regulatory fund.
37 13 Sec. . NEW SECTION. 523A.805 CEASE AND DESIST
37 14 ORDERS – INJUNCTIONS.
37 15 If it appears to the commissioner that a person has
37 16 engaged or is about to engage in an act or practice
37 17 constituting a violation of this chapter, implementing
37 18 rules, or orders issued under this chapter, the
37 19 commissioner or the attorney general may do either or
37 20 both of the following:
37 21 1. Issue a summary order directed at the person
37 22 requiring the person to cease and desist from engaging
37 23 in such act or practice. A person may request a
37 24 hearing within thirty days of issuance of the summary
37 25 order. If a hearing is not timely requested, the
37 26 summary order shall become final by operation of law.
37 27 The order shall remain effective from the date of
37 28 issuance until the date the order becomes final by
37 29 operation of law or is overturned by a presiding
37 30 officer following a request for hearing. Section
37 31 17A.18A is inapplicable to summary cease and desist
37 32 orders issued under this section.
37 33 2. Bring an action in the district court in any
37 34 county of the state for an injunction to restrain a
37 35 person subject to this chapter and any agents,
37 36 employees, or associates of the person from engaging
37 37 in conduct or practices deemed contrary to the public
37 38 interest. In any proceeding for an injunction, the
37 39 commissioner or attorney general may apply to the
37 40 court for a subpoena to require the appearance of a
37 41 defendant and the defendant's agents and for any
37 42 books, accounts, papers, correspondence, memoranda,
37 43 purchase agreements, files, or other documents or
37 44 records germane to the hearing upon the petition for
37 45 an injunction. Upon a proper showing, a permanent or
37 46 temporary injunction, restraining order, or writ of
37 47 mandamus shall be granted and a receiver may be
37 48 appointed for the defendant or the defendant's assets.
37 49 The commissioner or attorney general shall not be
37 50 required to post a bond.
38 1 Sec. . NEW SECTION. 523A.806 COURT ACTION FOR
38 2 FAILURE TO COOPERATE.
38 3 If a person fails or refuses to file any statement
38 4 or report or to produce any books, accounts, papers,
38 5 correspondence, memoranda, purchase agreements, files,
38 6 or other documents or records, or to obey any subpoena
38 7 issued by the commissioner, the commissioner may refer
38 8 the matter to the attorney general, who may apply to a
38 9 district court to enforce compliance. The court may
38 10 order any or all of the following:
38 11 1. Injunctive relief, restricting or prohibiting
38 12 the offer or sale of cemetery merchandise, funeral
38 13 merchandise, funeral services, or a combination
38 14 thereof.
38 15 2. Revocation or suspension of any permit issued
38 16 under this chapter.
38 17 3. Production of documents or records including
38 18 but not limited to books, accounts, papers,
38 19 correspondence, memoranda, purchase agreements, files,
38 20 or other documents or records.
38 21 4. Such other relief as may be required.
38 22 Such an order shall be effective until the person
38 23 files the statement or report or produces the
38 24 documents requested, or obeys the subpoena.
38 25 Sec. . NEW SECTION. 523A.807 PROSECUTION FOR
38 26 VIOLATIONS OF LAW.
38 27 1. A violation of this chapter or rules adopted or
38 28 orders issued under this chapter is a violation of
38 29 section 714.16, subsection 2, paragraph "a". The
38 30 remedies and penalties provided by section 714.16,
38 31 including but not limited to injunctive relief and
38 32 penalties, apply to violations of this chapter.
38 33 2. If the commissioner believes that grounds exist
38 34 for the criminal prosecution of persons subject to
38 35 this chapter for violations of this chapter or any
38 36 other law of this state, the commissioner may forward
38 37 to the attorney general or the county attorney the
38 38 grounds for the belief, including all evidence in the
38 39 commissioner's possession, so that the attorney
38 40 general or the county attorney may proceed with the
38 41 matter as deemed appropriate. At the request of the
38 42 attorney general, the county attorney shall appear and
38 43 prosecute the action when brought in the county
38 44 attorney's county.
38 45 Sec. . NEW SECTION. 523A.808 COOPERATION WITH
38 46 OTHER AGENCIES.
38 47 1. To encourage uniform interpretation and
38 48 administration of this chapter and effective
38 49 regulation of the sale of cemetery merchandise,
38 50 funeral merchandise, and funeral services, the
39 1 commissioner may cooperate with any governmental law
39 2 enforcement or regulatory agency.
39 3 2. This cooperation includes but is not limited
39 4 to:
39 5 a. Making a joint examination or investigation.
39 6 b. Holding a joint administrative hearing.
39 7 c. Filing and prosecuting a joint civil or
39 8 administrative proceeding.
39 9 d. Sharing and exchanging personnel.
39 10 e. Sharing and exchanging relevant information and
39 11 documents.
39 12 f. Formulating, in accordance with chapter 17A,
39 13 rules or proposed rules on matters such as statements
39 14 of policy, regulatory standards, guidelines, and
39 15 interpretive opinions.
39 16 Sec. . NEW SECTION. 523A.809 RULES, FORMS,
39 17 AND ORDERS.
39 18 1. Under chapter 17A, the commissioner may from
39 19 time to time make, amend, and rescind such rules,
39 20 forms, and orders as are necessary or appropriate for
39 21 the protection of purchasers and the public and to
39 22 administer the provisions of this chapter, its
39 23 implementing rules, and orders issued under this
39 24 chapter.
39 25 2. A rule, form, or order shall not be made,
39 26 amended, or rescinded unless the commissioner finds
39 27 that the action is necessary or appropriate in the
39 28 public interest or for the protection of purchasers
39 29 and consistent with the purposes fairly intended by
39 30 the policies and provisions of this chapter, its
39 31 implementing rules, and orders issued under this
39 32 chapter.
39 33 3. A provision of this chapter imposing any
39 34 liability does not apply to any act done or omitted in
39 35 good faith in conformity with any rules, form, or
39 36 order of the commissioner, notwithstanding that the
39 37 rule, form, or order may later be amended or rescinded
39 38 or be determined by judicial or other authority to be
39 39 invalid for any reason.
39 40 Sec. . NEW SECTION. 523A.810 DATE OF FILING
39 41 AND INTERPRETIVE OPINIONS.
39 42 1. A document is filed when it is received by the
39 43 commissioner.
39 44 2. Requests for interpretive opinions may be
39 45 granted in the commissioner's discretion.
39 46 Sec. . NEW SECTION. 523A.811 RECEIVERSHIPS.
39 47 1. The commissioner shall notify the attorney
39 48 general of the potential need for establishment of a
39 49 receivership if the commissioner finds that a seller
39 50 subject to this chapter meets one or more of the
40 1 following conditions:
40 2 a. Is insolvent.
40 3 b. Has utilized trust funds for personal or
40 4 business purposes in a manner inconsistent with this
40 5 chapter.
40 6 c. The amount of funds currently held in trust for
40 7 cemetery merchandise, funeral merchandise, and funeral
40 8 services is less than eighty percent of all payments
40 9 made under the purchase agreements referred to in
40 10 section 523A.201.
40 11 d. Has refused to pay any just claim or demand
40 12 based on a purchase agreement referred to in section
40 13 523A.201.
40 14 e. The commissioner finds upon investigation that
40 15 a seller is unable to pay any claim or demand based on
40 16 a purchase agreement which has been legally determined
40 17 to be just and outstanding.
40 18 2. The commissioner or attorney general may apply
40 19 to the district court in any county of the state for
40 20 the establishment of a receivership. Upon proof of
40 21 any of the grounds for a receivership described in
40 22 this section, the court may grant a receivership.
40 23 Sec. . NEW SECTION. 523A.812 INSURANCE
40 24 DIVISION'S REGULATORY FUND.
40 25 The insurance division may authorize the creation
40 26 of a special revenue fund in the state treasury, to be
40 27 known as the insurance division regulatory fund. The
40 28 commissioner shall allocate annually from the fees
40 29 paid pursuant to section 523A.204, two dollars for
40 30 each purchase agreement reported on an establishment
40 31 permit holder's annual report for deposit to the
40 32 regulatory fund. The remainder of the fees collected
40 33 pursuant to section 523A.204 shall be deposited into
40 34 the general fund of the state. The moneys in the
40 35 regulatory fund shall be retained in the fund. The
40 36 moneys are appropriated and, subject to authorization
40 37 by the commissioner, may be used to pay auditors,
40 38 audit expenses, investigative expenses, the expenses
40 39 of mediation ordered by the commissioner, consumer
40 40 education expenses, the expenses of a toll-free
40 41 telephone line to receive consumer complaints, and the
40 42 expenses of receiverships established under section
40 43 523A.811. An annual allocation to the regulatory fund
40 44 shall not be imposed if the current balance of the
40 45 fund exceeds two hundred thousand dollars.
40 46 Sec. . NEW SECTION. 523A.813 LICENSE
40 47 REVOCATION – RECOMMENDATION BY COMMISSIONER TO BOARD
40 48 OF MORTUARY SCIENCE EXAMINERS.
40 49 Upon a determination by the commissioner that
40 50 grounds exist for an administrative license revocation
41 1 or suspension action by the board of mortuary science
41 2 examiners under chapter 156, the commissioner may
41 3 forward to the board the grounds for the
41 4 determination, including all evidence in the
41 5 possession of the commissioner, so that the board may
41 6 proceed with the matter as deemed appropriate.
41 7 SUBCHAPTER 9
41 8 LIQUIDATION PROCEDURES
41 9 Sec. . NEW SECTION. 523A.901 LIQUIDATION.
41 10 1. GROUNDS FOR LIQUIDATION. The commissioner may
41 11 petition the district court for an order directing the
41 12 commissioner to liquidate an establishment on either
41 13 of the following grounds:
41 14 a. The establishment did not deposit funds
41 15 pursuant to section 523A.201 or withdrew funds in a
41 16 manner inconsistent with this chapter and is
41 17 insolvent.
41 18 b. The establishment did not deposit funds
41 19 pursuant to section 523A.201 or withdrew funds in a
41 20 manner inconsistent with this chapter and the
41 21 condition of the establishment is such that further
41 22 transaction of business would be hazardous,
41 23 financially or otherwise, to purchasers or the public.
41 24 2. LIQUIDATION ORDER.
41 25 a. An order to liquidate the business of an
41 26 establishment shall appoint the commissioner as
41 27 liquidator and shall direct the liquidator to
41 28 immediately take possession of the assets of the
41 29 establishment and to administer them under the general
41 30 supervision of the court. The liquidator is vested
41 31 with the title to the property, contracts, and rights
41 32 of action and the books and records of the
41 33 establishment ordered liquidated, wherever located, as
41 34 of the entry of the final order of liquidation. The
41 35 filing or recording of the order with the clerk of
41 36 court and the recorder of deeds of the county in which
41 37 its principal office or place of business is located,
41 38 or, in the case of real estate with the recorder of
41 39 deeds of the county where the property is located, is
41 40 notice as a deed, bill of sale, or other evidence of
41 41 title duly filed or recorded with the recorder of
41 42 deeds.
41 43 b. Upon issuance of an order, the rights and
41 44 liabilities of an establishment and of the
41 45 establishment's creditors, purchasers, owners, and
41 46 other persons interested in the establishment's estate
41 47 shall become fixed as of the date of the entry of the
41 48 order of liquidation, except as provided in subsection
41 49 14.
41 50 c. At the time of petitioning for an order of
42 1 liquidation, or at any time after the time of
42 2 petitioning, the commissioner, after making
42 3 appropriate findings of an establishment's insolvency,
42 4 may petition the court for a declaration of
42 5 insolvency. After providing notice and hearing as it
42 6 deems proper, the court may make the declaration.
42 7 d. An order issued under this section shall
42 8 require accounting to the court by the liquidator.
42 9 Accountings, at a minimum, must include all funds
42 10 received or disbursed by the liquidator during the
42 11 current period. An accounting shall be filed within
42 12 one year of the liquidation order and at such other
42 13 times as the court may require.
42 14 e. Within five days after the initiation of an
42 15 appeal of an order of liquidation, which order has not
42 16 been stayed, the commissioner shall present for the
42 17 court's approval a plan for the continued performance
42 18 of the establishment's obligations during the pendency
42 19 of an appeal. The plan shall provide for the
42 20 continued performance of purchase agreements in the
42 21 normal course of events, notwithstanding the grounds
42 22 alleged in support of the order of liquidation
42 23 including the ground of insolvency. If the defendant
42 24 establishment's financial condition, in the judgment
42 25 of the commissioner, will not support the full
42 26 performance of all obligations during the appeal
42 27 pendency period, the plan may prefer the claims of
42 28 certain purchasers and claimants over creditors and
42 29 interested parties as well as other purchasers and
42 30 claimants, as the commissioner finds to be fair and
42 31 equitable considering the relative circumstances of
42 32 such purchasers and claimants. The court shall
42 33 examine the plan submitted by the commissioner and if
42 34 it finds the plan to be in the best interests of the
42 35 parties, the court shall approve the plan. An action
42 36 shall not lie against the commissioner or any of the
42 37 commissioner's deputies, agents, clerks, assistants,
42 38 or attorneys by any party based on preference in an
42 39 appeal pendency plan approved by the court.
42 40 3. POWERS OF LIQUIDATOR.
42 41 a. The liquidator may do any of the following:
42 42 (1) Appoint a special deputy to act for the
42 43 liquidator under this chapter, and determine the
42 44 special deputy's reasonable compensation. The special
42 45 deputy shall have all the powers of the liquidator
42 46 granted by this section. The special deputy shall
42 47 serve at the pleasure of the liquidator.
42 48 (2) Hire employees and agents, legal counsel,
42 49 accountants, appraisers, consultants, and other
42 50 personnel as the commissioner may deem necessary to
43 1 assist in the liquidation.
43 2 (3) With the approval of the court, fix reasonable
43 3 compensation of employees and agents, legal counsel,
43 4 accountants, appraisers, and consultants.
43 5 (4) Pay reasonable compensation to persons
43 6 appointed and defray from the funds or assets of the
43 7 establishment all expenses of taking possession of,
43 8 conserving, conducting, liquidating, disposing of, or
43 9 otherwise dealing with the business and property of
43 10 the establishment. If the property of the
43 11 establishment does not contain sufficient cash or
43 12 liquid assets to defray the costs incurred, the
43 13 commissioner may advance the costs so incurred out of
43 14 the insurance division regulatory fund. Amounts so
43 15 advanced for expenses of administration shall be
43 16 repaid to the insurance division regulatory fund for
43 17 the use of the division out of the first available
43 18 moneys of the establishment.
43 19 (5) Hold hearings, subpoena witnesses, and compel
43 20 their attendance, administer oaths, examine a person
43 21 under oath, and compel a person to subscribe to the
43 22 person's testimony after it has been correctly reduced
43 23 to writing, and in connection to the proceedings
43 24 require the production of books, accounts, papers,
43 25 correspondence, memoranda, purchase agreements, files,
43 26 or other documents or records which the liquidator
43 27 deems relevant to the inquiry.
43 28 (6) Collect debts and moneys due and claims
43 29 belonging to the establishment, wherever located.
43 30 Pursuant to this subparagraph, the liquidator may do
43 31 any of the following:
43 32 (a) Institute timely action in other jurisdictions
43 33 to forestall garnishment and attachment proceedings
43 34 against debts.
43 35 (b) Perform acts as are necessary or expedient to
43 36 collect, conserve, or protect its assets or property,
43 37 including the power to sell, compound, compromise, or
43 38 assign debts for purposes of collection upon terms and
43 39 conditions as the liquidator deems best.
43 40 (c) Pursue any creditor's remedies available to
43 41 enforce claims.
43 42 (7) Conduct public and private sales of the
43 43 property of the establishment.
43 44 (8) Use assets of the establishment under a
43 45 liquidation order to transfer obligations of purchase
43 46 agreements to a solvent establishment, if the transfer
43 47 can be accomplished without prejudice to the
43 48 applicable priorities under subsection 18.
43 49 (9) Acquire, hypothecate, encumber, lease,
43 50 improve, sell, transfer, abandon, or otherwise dispose
44 1 of or deal with property of the establishment at its
44 2 market value or upon terms and conditions as are fair
44 3 and reasonable. The liquidator shall also have power
44 4 to execute, acknowledge, and deliver deeds,
44 5 assignments, releases, and other instruments necessary
44 6 to effectuate a sale of property or other transaction
44 7 in connection with the liquidation.
44 8 (10) Borrow money on the security of the
44 9 establishment's assets or without security and execute
44 10 and deliver documents necessary to that transaction
44 11 for the purpose of facilitating the liquidation.
44 12 Money borrowed pursuant to this subparagraph shall be
44 13 repaid as an administrative expense and shall have
44 14 priority over any other class 1 claims under the
44 15 priority of distribution established in subsection 18.
44 16 (11) Enter into contracts as necessary to carry
44 17 out the order to liquidate and affirm or disavow
44 18 contracts to which the establishment is a party.
44 19 (12) Continue to prosecute and to institute in the
44 20 name of the establishment or in the liquidator's own
44 21 name any and all suits and other legal proceedings, in
44 22 this state or elsewhere, and to abandon the
44 23 prosecution of claims the liquidator deems
44 24 unprofitable to pursue further.
44 25 (13) Prosecute an action on behalf of the
44 26 creditors, purchasers, or owners against an officer of
44 27 the establishment or any other person.
44 28 (14) Remove records and property of the
44 29 establishment to the offices of the commissioner or to
44 30 other places as may be convenient for the purposes of
44 31 efficient and orderly execution of the liquidation.
44 32 (15) Deposit in one or more banks in this state
44 33 sums as are required for meeting current
44 34 administration expenses and distributions.
44 35 (16) Unless the court orders otherwise, invest
44 36 funds not currently needed.
44 37 (17) File necessary documents for recording in the
44 38 office of the recorder of deeds or record office in
44 39 this state or elsewhere where property of the
44 40 establishment is located.
44 41 (18) Assert defenses available to the
44 42 establishment against third persons including statutes
44 43 of limitations, statutes of fraud, and the defense of
44 44 usury. A waiver of a defense by the establishment
44 45 after a petition in liquidation has been filed shall
44 46 not bind the liquidator.
44 47 (19) Exercise and enforce the rights, remedies,
44 48 and powers of a creditor, purchaser, or owner,
44 49 including the power to avoid transfer or lien that may
44 50 be given by the general law and that is not included
45 1 within subsections 7 through 9.
45 2 (20) Intervene in a proceeding wherever instituted
45 3 that might lead to the appointment of a receiver or
45 4 trustee, and act as the receiver or trustee whenever
45 5 the appointment is offered.
45 6 (21) Exercise powers now held or later conferred
45 7 upon receivers by the laws of this state which are not
45 8 inconsistent with this chapter.
45 9 b. This subsection does not limit the liquidator
45 10 or exclude the liquidator from exercising a power not
45 11 listed in paragraph "a" that may be necessary or
45 12 appropriate to accomplish the purposes of this
45 13 chapter.
45 14 4. NOTICE TO CREDITORS AND OTHERS.
45 15 a. Unless the court otherwise directs, the
45 16 liquidator shall give notice of the liquidation order
45 17 as soon as possible by doing both of the following:
45 18 (1) Mailing notice, by first-class mail, to all
45 19 persons known or reasonably expected to have claims
45 20 against the establishment, including purchasers, at
45 21 their last known address as indicated by the records
45 22 of the establishment.
45 23 (2) Publication of notice in a newspaper of
45 24 general circulation in the county in which the
45 25 establishment has its principal place of business and
45 26 in other locations as the liquidator deems
45 27 appropriate.
45 28 b. Notice to potential claimants under paragraph
45 29 "a" shall require claimants to file with the
45 30 liquidator their claims together with proper proofs of
45 31 the claim under subsection 13 on or before a date the
45 32 liquidator shall specify in the notice. Claimants
45 33 shall keep the liquidator informed of their changes of
45 34 address, if any.
45 35 c. If notice is given pursuant to this subsection,
45 36 the distribution of assets of the establishment under
45 37 this chapter shall be conclusive with respect to
45 38 claimants, whether or not a claimant actually received
45 39 notice.
45 40 5. ACTIONS BY AND AGAINST LIQUIDATOR.
45 41 a. After issuance of an order appointing a
45 42 liquidator of an establishment, an action at law or
45 43 equity shall not be brought against the establishment
45 44 within this state or elsewhere, and existing actions
45 45 shall not be maintained or further presented after
45 46 issuance of the order. Whenever in the liquidator's
45 47 judgment, protection of the estate of the
45 48 establishment necessitates intervention in an action
45 49 against the establishment that is pending outside this
45 50 state, the liquidator may intervene in the action.
46 1 The liquidator may defend, at the expense of the
46 2 estate of the establishment, an action in which the
46 3 liquidator intervenes under this section.
46 4 b. Within two years or such additional time as
46 5 applicable law may permit, the liquidator, after the
46 6 issuance of an order for liquidation, may institute an
46 7 action or proceeding on behalf of the estate of the
46 8 establishment upon any cause of action against which
46 9 the period of limitation fixed by applicable law has
46 10 not expired at the time of the filing of the petition
46 11 upon which the order is entered. If a period of
46 12 limitation is fixed by agreement for instituting a
46 13 suit or proceeding upon a claim, or for filing a
46 14 claim, proof of claim, proof of loss, demand, notice,
46 15 or the like, or if in a proceeding, judicial or
46 16 otherwise, a period of limitation is fixed in the
46 17 proceeding or pursuant to applicable law for taking an
46 18 action, filing a claim or pleading, or doing an act,
46 19 and if the period has not expired at the date of the
46 20 filing of the petition, the liquidator may, for the
46 21 benefit of the estate, take any action or do any act,
46 22 required of or permitted to the establishment, within
46 23 a period of one hundred eighty days subsequent to the
46 24 entry of an order for liquidation, or within a further
46 25 period as is shown to the satisfaction of the court
46 26 not to be unfairly prejudicial to the other party.
46 27 c. A statute of limitations or defense of laches
46 28 shall not run with respect to an action against an
46 29 establishment between the filing of a petition for
46 30 liquidation against the establishment and the denial
46 31 of the petition. An action against the establishment
46 32 that might have been commenced when the petition was
46 33 filed may be commenced for at least sixty days after
46 34 the petition is denied.
46 35 6. COLLECTION AND LIST OF ASSETS.
46 36 a. As soon as practicable after the liquidation
46 37 order but not later than one hundred twenty days after
46 38 such order, the liquidator shall prepare in duplicate
46 39 a list of the establishment's assets. The list shall
46 40 be amended or supplemented as the liquidator may
46 41 determine. One copy shall be filed in the office of
46 42 the clerk of court, and one copy shall be retained for
46 43 the liquidator's files. Amendments and supplements
46 44 shall be similarly filed.
46 45 b. The liquidator shall reduce the assets to a
46 46 degree of liquidity that is consistent with the
46 47 effective execution of the liquidation.
46 48 c. A submission of a proposal to the court for
46 49 distribution of assets in accordance with subsection
46 50 11 fulfills the requirements of paragraph "a".
47 1 7. FRAUDULENT TRANSFERS PRIOR TO PETITION.
47 2 a. A transfer made and an obligation incurred by
47 3 an establishment within one year prior to the filing
47 4 of a successful petition for liquidation under this
47 5 chapter is fraudulent as to then existing and future
47 6 creditors if made or incurred without fair
47 7 consideration, or with actual intent to hinder, delay,
47 8 or defraud either existing or future creditors. A
47 9 fraudulent transfer made or an obligation incurred by
47 10 an establishment ordered to be liquidated under this
47 11 chapter may be avoided by the liquidator, except as to
47 12 a person who in good faith is a purchaser, lienor, or
47 13 obligee for a present fair equivalent value. A
47 14 purchaser, lienor, or obligee, who in good faith has
47 15 given a consideration less than present fair
47 16 equivalent value for such transfer, lien, or
47 17 obligation, may retain the property, lien, or
47 18 obligation as security for repayment. The court may,
47 19 on due notice, order any such transfer, lien, or
47 20 obligation to be preserved for the benefit of the
47 21 estate, and in that event, the receiver shall succeed
47 22 to and may enforce the rights of the purchaser,
47 23 lienor, or obligee.
47 24 b. (1) A transfer of property other than real
47 25 property is made when it becomes perfected so that a
47 26 subsequent lien obtainable by legal or equitable
47 27 proceedings on a simple contract could not become
47 28 superior to the rights of the transferee under
47 29 subsection 9, paragraph "c".
47 30 (2) A transfer of real property is made when it
47 31 becomes perfected so that a subsequent bona fide
47 32 purchaser from the establishment could not obtain
47 33 rights superior to the rights of the transferee.
47 34 (3) A transfer which creates an equitable lien is
47 35 not perfected if there are available means by which a
47 36 legal lien could be perfected.
47 37 (4) A transfer not perfected prior to the filing
47 38 of a petition for liquidation is deemed to be made
47 39 immediately before the filing of the successful
47 40 petition.
47 41 (5) This subsection applies whether or not there
47 42 are or were creditors who might have obtained a lien
47 43 or persons who might have become bona fide purchasers.
47 44 8. FRAUDULENT TRANSFER AFTER PETITION.
47 45 a. After a petition for liquidation has been
47 46 filed, a transfer of real property of the
47 47 establishment made to a person acting in good faith is
47 48 valid against the liquidator if made for a present
47 49 fair equivalent value. If the transfer is not made
47 50 for a present fair equivalent value, then the transfer
48 1 is valid to the extent of the present consideration
48 2 actually paid for which amount the transferee shall
48 3 have a lien on the property transferred. The
48 4 commencement of a proceeding in liquidation is
48 5 constructive notice upon the recording of a copy of
48 6 the petition for or order of liquidation with the
48 7 recording or deeds in the county where any real
48 8 property in question is located. The exercise by a
48 9 court of the United States or a state or jurisdiction
48 10 to authorize a judicial sale of real property of the
48 11 establishment within a county in a state shall not be
48 12 impaired by the pendency of a proceeding unless the
48 13 copy is recorded in the county prior to the
48 14 consummation of the judicial sale.
48 15 b. After a petition for liquidation has been filed
48 16 and before either the liquidator takes possession of
48 17 the property of the establishment or an order of
48 18 liquidation is granted:
48 19 (1) A transfer of the property, other than real
48 20 property, of the establishment made to a person acting
48 21 in good faith is valid against the liquidator if made
48 22 for a present fair equivalent value. If the transfer
48 23 was not made for a present fair equivalent value, then
48 24 the transfer is valid to the extent of the present
48 25 consideration actually paid for which amount the
48 26 transferee shall have a lien on the property
48 27 transferred.
48 28 (2) If acting in good faith, a person indebted to
48 29 the establishment or holding property of the
48 30 establishment may pay the debt or deliver the
48 31 property, or any part of the property, to the
48 32 establishment or upon the establishment's order as if
48 33 the petition were not pending.
48 34 (3) A person having actual knowledge of the
48 35 pending liquidation is not acting in good faith.
48 36 (4) A person asserting the validity of a transfer
48 37 under this subsection has the burden of proof. Except
48 38 as provided in this subsection, a transfer by or on
48 39 behalf of the establishment after the date of the
48 40 petition for liquidation by any person other than the
48 41 liquidator is not valid against the liquidator.
48 42 c. A person receiving any property from the
48 43 establishment or any benefit of the property of the
48 44 establishment which is a fraudulent transfer under
48 45 paragraph "a" is personally liable for the property or
48 46 benefit and shall account to the liquidator.
48 47 d. This chapter does not impair the negotiability
48 48 of currency or negotiable instruments.
48 49 9. VOIDABLE PREFERENCES AND LIENS.
48 50 a. (1) A preference is a transfer of the property
49 1 of an establishment to or for the benefit of a
49 2 creditor for an antecedent debt made or suffered by
49 3 the establishment within one year before the filing of
49 4 a successful petition for liquidation under this
49 5 chapter, the effect of which transfer may be to enable
49 6 the creditor to obtain a greater percentage of this
49 7 debt than another creditor of the same class would
49 8 receive. If a liquidation order is entered while the
49 9 establishment is already subject to a receivership,
49 10 then the transfers are preferences if made or suffered
49 11 within one year before the filing of the successful
49 12 petition for the receivership, or within two years
49 13 before the filing of the successful petition for
49 14 liquidation, whichever time is shorter.
49 15 (2) A preference may be avoided by the liquidator
49 16 if any of the following exist:
49 17 (a) The establishment was insolvent at the time of
49 18 the transfer.
49 19 (b) The transfer was made within four months
49 20 before the filing of the petition.
49 21 (c) At the time the transfer was made, the
49 22 creditor receiving it or to be benefited by the
49 23 transfer or the creditor's agent acting with reference
49 24 to the transfer had reasonable cause to believe that
49 25 the establishment was insolvent or was about to become
49 26 insolvent.
49 27 (d) The creditor receiving the transfer was an
49 28 officer, or an employee, attorney, or other person who
49 29 was in fact in a position of comparable influence in
49 30 the establishment to an officer whether or not the
49 31 person held the position of an officer, owner, or
49 32 other person, firm, corporation, association, or
49 33 aggregation of persons with whom the establishment did
49 34 not deal at arm's length.
49 35 (3) Where the preference is voidable, the
49 36 liquidator may recover the property. If the property
49 37 has been converted, the liquidator may recover its
49 38 value from a person who has received or converted the
49 39 property. However, if a bona fide purchaser or lienor
49 40 has given less than the present fair equivalent value,
49 41 the purchaser or lienor shall have a lien upon the
49 42 property to the extent of the consideration actually
49 43 given. Where a preference by way of lien or security
49 44 interest is voidable, the court may on due notice
49 45 order the lien or security interest to be preserved
49 46 for the benefit of the estate, in which event the lien
49 47 or title shall pass to the liquidator.
49 48 b. (1) A transfer of property other than real
49 49 property is made when it becomes perfected so that a
49 50 subsequent lien obtainable by legal or equitable
50 1 proceedings on a simple contract could not become
50 2 superior to the rights of the transferee.
50 3 (2) A transfer of real property is made when it
50 4 becomes perfected so that a subsequent bona fide
50 5 purchaser from the establishment could not obtain
50 6 rights superior to the rights of the transferee.
50 7 (3) A transfer which creates an equitable lien is
50 8 not perfected if there are available means by which a
50 9 legal lien could be created.
50 10 (4) A transfer not perfected prior to the filing
50 11 of a petition for liquidation is deemed to be made
50 12 immediately before the filing of the successful
50 13 petition.
50 14 (5) This subsection applies whether or not there
50 15 are or were creditors who might have obtained liens or
50 16 persons who might have become bona fide purchasers.
50 17 c. (1) A lien obtainable by legal or equitable
50 18 proceedings upon a simple contract is one arising in
50 19 the ordinary course of the proceedings upon the entry
50 20 or docketing of a judgment or decree, or upon
50 21 attachment, garnishment, execution, or like process,
50 22 whether before, upon, or after judgment or decree and
50 23 whether before or upon levy. It does not include
50 24 liens which under applicable law are given a special
50 25 priority over other liens which are prior in time.
50 26 (2) A lien obtainable by legal or equitable
50 27 proceedings may become superior to the rights of a
50 28 transferee, or a purchaser may obtain rights superior
50 29 to the rights of a transferee within the meaning of
50 30 paragraph "b", if such consequences follow only from
50 31 the lien or purchase itself, or from the lien or
50 32 purchase followed by a step wholly within the control
50 33 of the respective lienholder or purchaser, with or
50 34 without the aid of ministerial action by public
50 35 officials. However, a lien could not become superior
50 36 and a purchase could not create superior rights for
50 37 the purpose of paragraph "b" through an act subsequent
50 38 to the obtaining of a lien or subsequent to a purchase
50 39 which requires the agreement or concurrence of any
50 40 third party or which requires further judicial action
50 41 or ruling.
50 42 d. A transfer of property for or on account of a
50 43 new and contemporaneous consideration, which is under
50 44 paragraph "b" made or suffered after the transfer
50 45 because of delay in perfecting it, does not become a
50 46 transfer for or on account of an antecedent debt if
50 47 any acts required by the applicable law to be
50 48 performed in order to perfect the transfer as against
50 49 liens or a bona fide purchaser's rights are performed
50 50 within twenty-one days or any period expressly allowed
51 1 by the law, whichever is less. A transfer to secure a
51 2 future loan, if a loan is actually made, or a transfer
51 3 which becomes security for a future loan, shall have
51 4 the same effect as a transfer for or on account of a
51 5 new and contemporaneous consideration.
51 6 e. If a lien which is voidable under paragraph
51 7 "a", subparagraph (2), has been dissolved by the
51 8 furnishing of a bond or other obligation, the surety
51 9 of which has been indemnified directly or indirectly
51 10 by the transfer or the creation of a lien upon
51 11 property of an establishment before the filing of a
51 12 petition under this chapter which results in the
51 13 liquidation order, the indemnifying transfer or lien
51 14 is also voidable.
51 15 f. The property affected by a lien voidable under
51 16 paragraphs "a" and "e" is discharged from the lien.
51 17 The property and any of the indemnifying property
51 18 transferred to or for the benefit of a surety shall
51 19 pass to the liquidator. However, the court may on due
51 20 notice order a lien to be preserved for the benefit of
51 21 the estate and the court may direct that the
51 22 conveyance be executed to evidence the title of the
51 23 liquidator.
51 24 g. The court shall have summary jurisdiction of a
51 25 proceeding by a liquidator to hear and determine the
51 26 rights of the parties under this section. Reasonable
51 27 notice of hearing in the proceeding shall be given to
51 28 all parties in interest, including the obligee of a
51 29 releasing bond or other like obligation. Where an
51 30 order is entered for the recovery of indemnifying
51 31 property in kind or for the avoidance of an
51 32 indemnifying lien, upon application of any party in
51 33 interest, the court shall in the same proceeding
51 34 ascertain the value of the property or lien. If the
51 35 value is less than the amount for which the property
51 36 is indemnified or less than the amount of the lien,
51 37 the transferee or lienholder may elect to retain the
51 38 property or lien upon payment of its value, as
51 39 ascertained by the court, to the liquidator within the
51 40 time as fixed by the court.
51 41 h. The liability of a surety under a releasing
51 42 bond or other like obligation is discharged to the
51 43 extent of the value of the indemnifying property
51 44 recovered or the indemnifying lien nullified and
51 45 avoided by the liquidator. Where the property is
51 46 retained under paragraph "g", the liability of the
51 47 surety is discharged to the extent of the amount paid
51 48 to the liquidator.
51 49 i. If a creditor has been preferred for property
51 50 which becomes a part of the establishment's estate,
52 1 and afterward in good faith gives the establishment
52 2 further credit without security of any kind, the
52 3 amount of the new credit remaining unpaid at the time
52 4 of the petition may be set off against the preference
52 5 which would otherwise be recoverable from the
52 6 creditor.
52 7 j. If within four months before the filing of a
52 8 successful petition for liquidation under this
52 9 chapter, or at any time in contemplation of a
52 10 proceeding to liquidate, an establishment, directly or
52 11 indirectly, pays money or transfers property to an
52 12 attorney for services rendered or to be rendered, the
52 13 transaction may be examined by the court on its own
52 14 motion or shall be examined by the court on petition
52 15 of the liquidator. The payment or transfer shall be
52 16 held valid only to the extent of a reasonable amount
52 17 to be determined by the court. The excess may be
52 18 recovered by the liquidator for the benefit of the
52 19 estate. However, where the attorney is in a position
52 20 of influence in the establishment or an affiliate,
52 21 payment of any money or the transfer of any property
52 22 to the attorney for services rendered or to be
52 23 rendered shall be governed by the provisions of
52 24 paragraph "a", subparagraph (2), subparagraph
52 25 subdivision (d).
52 26 k. (1) An officer, manager, employee,
52 27 shareholder, subscriber, attorney, or other person
52 28 acting on behalf of the establishment who knowingly
52 29 participates in giving any preference when the person
52 30 has reasonable cause to believe the establishment is
52 31 or is about to become insolvent at the time of the
52 32 preference is personally liable to the liquidator for
52 33 the amount of the preference. There is an inference
52 34 that reasonable cause exists if the transfer was made
52 35 within four months before the date of filing of this
52 36 successful petition for liquidation.
52 37 (2) A person receiving property from the
52 38 establishment or the benefit of the property of the
52 39 establishment as a preference voidable under paragraph
52 40 "a" is personally liable for the property and shall
52 41 account to the liquidator.
52 42 (3) This subsection shall not prejudice any other
52 43 claim by the liquidator against any person.
52 44 10. CLAIMS OF HOLDER OF VOID OR VOIDABLE RIGHTS.
52 45 a. A claim of a creditor who has received or
52 46 acquired a preference, lien, conveyance, transfer,
52 47 assignment, or encumbrance, voidable under this
52 48 chapter, shall not be allowed unless the creditor
52 49 surrenders the preference, lien, conveyance, transfer,
52 50 assignment, or encumbrance. If the avoidance is
53 1 effected by a proceeding in which a final judgment has
53 2 been entered, the claim shall not be allowed unless
53 3 the money is paid or the property is delivered to the
53 4 liquidator within thirty days from the date of the
53 5 entering of the final judgment. However, the court
53 6 having jurisdiction over the liquidation may allow
53 7 further time if there is an appeal or other
53 8 continuation of the proceeding.
53 9 b. A claim allowable under paragraph "a" by reason
53 10 of a voluntary or involuntary avoidance, preference,
53 11 lien, conveyance, transfer, assignment, or encumbrance
53 12 may be filed as an excused late filing under
53 13 subsection 12, if filed within thirty days from the
53 14 date of the avoidance or within the further time
53 15 allowed by the court under paragraph "a".
53 16 11. LIQUIDATOR'S PROPOSAL TO DISTRIBUTE ASSETS.
53 17 a. From time to time as assets become available,
53 18 the liquidator shall make application to the court for
53 19 approval of a proposal to disburse assets out of
53 20 marshaled assets.
53 21 b. The proposal shall at least include provisions
53 22 for all of the following:
53 23 (1) Reserving amounts for the payment of all the
53 24 following:
53 25 (a) Expenses of administration.
53 26 (b) To the extent of the value of the security
53 27 held, the payment of claims of secured creditors.
53 28 (c) Claims falling within the priorities
53 29 established in subsection 18, paragraphs "a" and "b".
53 30 (2) Disbursement of the assets marshaled to date
53 31 and subsequent disbursement of assets as they become
53 32 available.
53 33 c. Action on the application may be taken by the
53 34 court provided that the liquidator's proposal complies
53 35 with paragraph "b".
53 36 12. FILING OF CLAIMS.
53 37 a. Proof of all claims shall be filed with the
53 38 liquidator in the form required by subsection 13 on or
53 39 before the last day for filing specified in the notice
53 40 required under subsection 4.
53 41 b. The liquidator may permit a claimant making a
53 42 late filing to share in distributions, whether past or
53 43 future, as if the claimant were not late, to the
53 44 extent that the payment will not prejudice the orderly
53 45 administration of the liquidation under any of the
53 46 following circumstances:
53 47 (1) The existence of the claim was not known to
53 48 the claimant and the claimant filed the claim as
53 49 promptly as reasonably possible after learning of it.
53 50 (2) A transfer to a creditor was avoided under
54 1 subsections 7 through 9, or was voluntarily
54 2 surrendered under subsection 10, and the filing
54 3 satisfies the conditions of subsection 10.
54 4 (3) The valuation under subsection 17 of security
54 5 held by a secured creditor shows a deficiency, which
54 6 is filed within thirty days after the valuation.
54 7 c. The liquidator may consider any claim filed
54 8 late and permit the claimant to receive distributions
54 9 which are subsequently declared on any claims of the
54 10 same or lower priority if the payment does not
54 11 prejudice the orderly administration of the
54 12 liquidation. The late-filing claimant shall receive
54 13 at each distribution the same percentage of the amount
54 14 allowed on the claim as is then being paid to
54 15 claimants of any lower priority. This shall continue
54 16 until the claim has been paid in full.
54 17 13. PROOF OF CLAIM.
54 18 a. Proof of claim shall consist of a statement
54 19 signed by the claimant that includes all of the
54 20 following that are applicable:
54 21 (1) The particulars of the claim, including the
54 22 consideration given for it.
54 23 (2) The identity and amount of the security on the
54 24 claim.
54 25 (3) The payments, if any, made on the debt.
54 26 (4) A statement that the sum claimed is justly
54 27 owing and that there is no setoff, counterclaim, or
54 28 defense to the claim.
54 29 (5) Any right of priority of payment or other
54 30 specific right asserted by the claimant.
54 31 (6) A copy of the written instrument which is the
54 32 foundation of the claim.
54 33 (7) The name and address of the claimant and the
54 34 attorney who represents the claimant, if any.
54 35 b. A claim need not be considered or allowed if it
54 36 does not contain all the information identified in
54 37 paragraph "a" which is applicable. The liquidator may
54 38 require that a prescribed form be used and may require
54 39 that other information and documents be included.
54 40 c. At any time the liquidator may request the
54 41 claimant to present information or evidence
54 42 supplementary to that required under paragraph "a",
54 43 and may take testimony under oath, require production
54 44 of affidavits or depositions, or otherwise obtain
54 45 additional information or evidence.
54 46 d. A judgment or order against an establishment
54 47 entered after the date of filing of a successful
54 48 petition for liquidation, or a judgment or order
54 49 against the establishment entered at any time by
54 50 default or by collusion need not be considered as
55 1 evidence of liability or of the amount of damages. A
55 2 judgment or order against an establishment before the
55 3 filing of the petition need not be considered as
55 4 evidence of liability or of the amount of damages.
55 5 14. SPECIAL CLAIMS.
55 6 a. A claim may be allowed even if contingent, if
55 7 it is filed pursuant to subsection 12. The claim may
55 8 be allowed and the claimant may participate in all
55 9 distributions declared after it is filed to the extent
55 10 that it does not prejudice the orderly administration
55 11 of the liquidation.
55 12 b. Claims that are due except for the passage of
55 13 time shall be treated as absolute claims are treated.
55 14 However, the claims may be discounted at the legal
55 15 rate of interest.
55 16 c. Claims made under employment contracts by
55 17 directors, principal officers, or persons in fact
55 18 performing similar functions or having similar powers
55 19 are limited to payment for services rendered prior to
55 20 the issuance of an order of liquidation under
55 21 subsection 2.
55 22 15. DISPUTED CLAIMS.
55 23 a. If a claim is denied in whole or in part by the
55 24 liquidator, written notice of the determination shall
55 25 be given to the claimant or the claimant's attorney by
55 26 first-class mail at the address shown in the proof of
55 27 claim. Within sixty days from the mailing of the
55 28 notice, the claimant may file objections with the
55 29 liquidator. Unless a filing is made, the claimant
55 30 shall not further object to the determination.
55 31 b. If objections are filed with the liquidator and
55 32 the liquidator does not alter the denial of the claim
55 33 as a result of the objections, the liquidator shall
55 34 ask the court for a hearing as soon as practicable and
55 35 give notice of the hearing by first-class mail to the
55 36 claimant or the claimant's attorney and to any other
55 37 persons directly affected. The notice shall be given
55 38 not less than ten nor more than thirty days before the
55 39 date of hearing. The matter shall be heard by the
55 40 court or by a court-appointed referee. The referee
55 41 shall submit findings of fact along with a
55 42 recommendation.
55 43 16. CLAIMS OF OTHER PERSON. If a creditor, whose
55 44 claim against an establishment is secured in whole or
55 45 in part by the undertaking of another person, fails to
55 46 prove and file that claim, then the other person may
55 47 do so in the creditor's name and shall be subrogated
55 48 to the rights of the creditor, whether the claim has
55 49 been filed by the creditor or by the other person in
55 50 the creditor's name to the extent that the other
56 1 person discharges the undertaking. However, in the
56 2 absence of an agreement with the creditor to the
56 3 contrary, the other person is not entitled to any
56 4 distribution until the amount paid to the creditor on
56 5 the undertaking plus the distributions paid on the
56 6 claim from the establishment's estate to the creditor
56 7 equal the amount of the entire claim of the creditor.
56 8 An excess received by the creditor shall be held by
56 9 the creditor in trust for the other person.
56 10 17. SECURED CREDITOR'S CLAIMS.
56 11 a. The value of the security held by a secured
56 12 creditor shall be determined in one of the following
56 13 ways, as the court may direct:
56 14 (1) By converting the security into money
56 15 according to the terms of the agreement pursuant to
56 16 which the security was delivered to the creditors.
56 17 (2) By agreement, arbitration, compromise, or
56 18 litigation between the creditor and the liquidator.
56 19 b. The determination shall be under the
56 20 supervision and control of the court with due regard
56 21 for the recommendation of the liquidator. The amount
56 22 so determined shall be credited upon the secured
56 23 claim. A deficiency shall be treated as an unsecured
56 24 claim. If the claimant surrenders the security to the
56 25 liquidator, the entire claim shall be allowed as if
56 26 unsecured.
56 27 18. PRIORITY OF DISTRIBUTION. The priority of
56 28 distribution of claims from the establishment's estate
56 29 shall be in accordance with the order in which each
56 30 class of claims is set forth. Claims in each class
56 31 shall be paid in full or adequate funds retained for
56 32 the payment before the members of the next class
56 33 receive any payment. Subclasses shall not be
56 34 established within a class. The order of distribution
56 35 of claims is as follows:
56 36 a. CLASS 1. The costs and expenses of
56 37 administration, including but not limited to the
56 38 following:
56 39 (1) Actual and necessary costs of preserving or
56 40 recovering the assets of the establishment.
56 41 (2) Compensation for all authorized services
56 42 rendered in the liquidation.
56 43 (3) Necessary filing fees.
56 44 (4) Fees and mileage payable to witnesses.
56 45 (5) Authorized reasonable attorney fees and other
56 46 professional services rendered in the liquidation.
56 47 b. CLASS 2. Reasonable compensation to employees
56 48 for services performed to the extent that they do not
56 49 exceed two months of monetary compensation and
56 50 represent payment for services performed within one
57 1 year before the filing of the petition for
57 2 liquidation. Officers and directors are not entitled
57 3 to the benefit of this priority. The priority is in
57 4 lieu of other similar priority which may be authorized
57 5 by law as to wages or compensation of employees.
57 6 c. CLASS 3. Claims under purchase agreements.
57 7 d. CLASS 4. Claims of general creditors.
57 8 e. CLASS 5. Claims of the federal or of any state
57 9 or local government. Claims, including those of a
57 10 governmental body for a penalty or forfeiture, are
57 11 allowed in this class only to the extent of the
57 12 pecuniary loss sustained from the act, transaction, or
57 13 proceeding out of which the penalty or forfeiture
57 14 arose, with reasonable and actual costs incurred. The
57 15 remainder of such claims shall be postponed to the
57 16 class of claims under paragraph "g".
57 17 f. CLASS 6. Claims filed late or any other claims
57 18 other than claims under paragraph "g".
57 19 g. CLASS 7. The claims of shareholders or other
57 20 owners.
57 21 19. LIQUIDATOR'S RECOMMENDATIONS TO THE COURT.
57 22 a. The liquidator shall review claims duly filed
57 23 in the liquidation and shall make further
57 24 investigation as necessary. The liquidator may
57 25 compound, compromise, or in any other manner negotiate
57 26 the amount for which claims will be recommended to the
57 27 court except where the liquidator is required by law
57 28 to accept claims as settled by a person or
57 29 organization. Unresolved disputes shall be determined
57 30 under subsection 15. As soon as practicable, the
57 31 liquidator shall present to the court a report of the
57 32 claims against the establishment with the liquidator's
57 33 recommendations. The report shall include the name
57 34 and address of each claimant and the amount of the
57 35 claim finally recommended.
57 36 b. The court may approve, disapprove, or modify
57 37 the report on claims by the liquidator. Reports not
57 38 modified by the court within sixty days following
57 39 submission by the liquidator shall be treated by the
57 40 liquidator as allowed claims, subject to later
57 41 modification or to rulings made by the court pursuant
57 42 to subsection 15. A claim under a policy of insurance
57 43 shall not be allowed for an amount in excess of the
57 44 applicable policy limits.
57 45 20. DISTRIBUTION OF ASSETS. Under the direction
57 46 of the court, the liquidator shall pay distributions
57 47 in a manner that will ensure the proper recognition of
57 48 priorities and a reasonable balance between the
57 49 expeditious completion of the liquidation and the
57 50 protection of unliquidated and undetermined claims,
58 1 including third-party claims. Distribution of assets
58 2 in kind may be made at valuations set by agreement
58 3 between the liquidator and the creditor and approved
58 4 by the court.
58 5 21. UNCLAIMED AND WITHHELD FUNDS.
58 6 a. Unclaimed funds subject to distribution
58 7 remaining in the liquidator's hands when the
58 8 liquidator is ready to apply to the court for
58 9 discharge, including the amount distributable to a
58 10 creditor, owner, or other person who is unknown or
58 11 cannot be found, shall be deposited with the treasurer
58 12 of the state, and shall be paid without interest,
58 13 except as provided in subsection 18, to the person
58 14 entitled or to the person's legal representative upon
58 15 proof satisfactory to the treasurer of state of the
58 16 right to the funds. Any amount on deposit not claimed
58 17 within six years from the discharge of the liquidator
58 18 is deemed to have been abandoned and shall become the
58 19 property of the state without formal escheat
58 20 proceedings and be transferred to the insurance
58 21 division regulatory fund.
58 22 b. Funds withheld under subsection 14 and not
58 23 distributed shall upon discharge of the liquidator be
58 24 deposited with the treasurer of state and paid
58 25 pursuant to subsection 18. Sums remaining which under
58 26 subsection 18 would revert to the undistributed assets
58 27 of the establishment shall be transferred to the
58 28 insurance division regulatory fund and become the
58 29 property of the state as provided under paragraph "a",
58 30 unless the commissioner in the commissioner's
58 31 discretion petitions the court to reopen the
58 32 liquidation pursuant to subsection 23.
58 33 c. Notwithstanding any other provision of this
58 34 chapter, funds as identified in paragraph "a", with
58 35 the approval of the court, shall be made available to
58 36 the commissioner for use in the detection and
58 37 prevention of future insolvencies. The commissioner
58 38 shall hold these funds in the insurance division
58 39 regulatory fund and shall pay without interest, except
58 40 as provided in subsection 18, to the person entitled
58 41 to the funds or to the person's legal representative
58 42 upon proof satisfactory to the commissioner of the
58 43 person's right to the funds. The funds shall be held
58 44 by the commissioner for a period of two years at which
58 45 time the rights and duties to the unclaimed funds
58 46 shall vest in the commissioner.
58 47 22. TERMINATION OF PROCEEDINGS.
58 48 a. When all assets justifying the expense of
58 49 collection and distribution have been collected and
58 50 distributed under this chapter, the liquidator shall
59 1 apply to the court for discharge. The court may grant
59 2 the discharge and make any other orders, including an
59 3 order to transfer remaining funds that are
59 4 uneconomical to distribute, as appropriate.
59 5 b. Any other person may apply to the court at any
59 6 time for an order under paragraph "a". If the
59 7 application is denied, the applicant shall pay the
59 8 costs and expenses of the liquidator in resisting the
59 9 application, including a reasonable attorney fee.
59 10 23. REOPENING LIQUIDATION. At any time after the
59 11 liquidation proceeding has been terminated and the
59 12 liquidator discharged, the commissioner or other
59 13 interested party may petition the court to reopen the
59 14 proceedings for good cause including the discovery of
59 15 additional assets. The court shall order the
59 16 proceeding reopened if it is satisfied that there is
59 17 justification for the reopening.
59 18 24. DISPOSITION OF RECORDS DURING AND AFTER
59 19 TERMINATION OF LIQUIDATION. If it appears to the
59 20 commissioner that the records of an establishment in
59 21 the process of liquidation or completely liquidated
59 22 are no longer useful, the commissioner may recommend
59 23 to the court and the court shall direct what records
59 24 shall be retained for future reference and what
59 25 records shall be destroyed.
59 26 25. EXTERNAL AUDIT OF LIQUIDATOR'S BOOKS. The
59 27 court may order audits to be made of the books of the
59 28 commissioner relating to a liquidation established
59 29 under this chapter, and a report of each audit shall
59 30 be filed with the commissioner and with the court.
59 31 The books, records, and other documents of the
59 32 liquidation shall be made available to the auditor at
59 33 any time without notice. The expense of an audit
59 34 shall be considered a cost of administration of the
59 35 liquidation.
59 36 Sec. . Chapters 523A and 523E, Code 2001, are
59 37 repealed."
59 38 #2. Title page, line 1, by inserting after the
59 39 word "Act" the following: "concerning regulated
59 40 industries under the jurisdiction of the commissioner
59 41 of insurance,".
59 42 #3. Title page, line 7, by inserting after the
59 43 word "requirements" the following: ", and relating to
59 44 cemetery and funeral merchandise and funeral services,
59 45 establishing permit and purchase agreement
59 46 requirements, establishing and appropriating fees, and
59 47 providing administration, enforcement, and liquidation
59 48 procedures, and penalties".
59 49 #4. By renumbering as necessary.
59 50
60 1
60 2
60 3 COMMITTEE ON COMMERCE AND REGULATION
60 4 HANSEN of Pottawattamie, Chairperson
60 5 SF 473.701 79
60 6 av/cls
Text: H01447 Text: H01449 Text: H01400 - H01499 Text: H Index Bills and Amendments: General Index Bill History: General Index
© 2001 Cornell College and League of Women Voters of Iowa
Comments about this site or page?
webmaster@legis.iowa.gov.
Please remember that the person listed above does not vote on bills. Direct all comments concerning legislation to State Legislators.
Last update: Tue Apr 10 03:35:34 CDT 2001
URL: /DOCS/GA/79GA/Legislation/H/01400/H01448/010406.html
jhf