Text: S03433 Text: S03435 Text: S03400 - S03499 Text: S 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 "Sec. . Section 507B.4, subsection 10B, 1 6 unnumbered paragraph 1, as enacted by 2001 Iowa Acts, 1 7 Senate File 500, section 7, is amended to read as 1 8 follows: 1 9 Failure of an insurer to pay interest at the rate 1 10 of ten percent per annum on all health insurance 1 11 claims that the insurer fails to timely accept and pay 1 12 pursuant to section 507B.4A, subsection12, paragraph 1 13"e""d". Interest shall accrue commencing on the 1 14 thirty-first day after receipt of all properly 1 15 completed proof of loss forms. 1 16 Sec. . Section 518.16, Code 2001, is amended to 1 17 read as follows: 1 18 518.16 QUALIFICATION OF AGENTS. 1 19 A person shall not solicit any application for 1 20 insurance for an association in this state without 1 21 having procured from the commissioner of insurance a 1 22 license authorizing the person to act as anagent1 23 insurance producer pursuant to chapter522522B. 1 24 "SUBCHAPTER 1 1 25 SHORT TITLE AND DEFINITIONS 1 26 Sec. . NEW SECTION. 523A.101 SHORT TITLE. 1 27 This chapter may be cited as the "Iowa Cemetery and 1 28 Funeral Merchandise and Funeral Services Act". 1 29 Sec. . NEW SECTION. 523A.102 DEFINITIONS. 1 30 For purposes of this chapter, unless the context 1 31 otherwise requires: 1 32 1. "Authorized to do business within this state" 1 33 means a person licensed, registered, or subject to 1 34 regulation by an agency of the state of Iowa or who 1 35 has filed a consent to service of process with the 1 36 commissioner for purposes of this chapter. 1 37 2. "Beneficiary" means any natural person 1 38 specified or included in a purchase agreement, upon 1 39 whose future death cemetery merchandise, funeral 1 40 merchandise, funeral services, or a combination 1 41 thereof are to be provided under the purchase 1 42 agreement. 1 43 3. "Burial account" means an account established 1 44 by a person with a financial institution for the 1 45 purpose of funding the future purchase of cemetery 1 46 merchandise, funeral merchandise, or a combination 1 47 thereof without any related trust agreement. 1 48 4. "Burial trust fund" means an irrevocable burial 1 49 trust fund established by a person with a financial 1 50 institution for the purpose of funding the future 2 1 purchase of cemetery merchandise, funeral merchandise, 2 2 funeral services, or a combination thereof upon the 2 3 death of the person named in the burial trust fund's 2 4 records or a related purchase agreement. "Burial 2 5 trust fund" does not include or imply the existence of 2 6 any oral or written purchase agreement for cemetery 2 7 merchandise, funeral merchandise, funeral services, or 2 8 a combination thereof between the person and a seller. 2 9 5. "Cemetery merchandise" means foundations, grave 2 10 markers, tombstones, ornamental merchandise, 2 11 memorials, and monuments sold under a purchase 2 12 agreement that does not require installation within 2 13 twelve months of the purchase. 2 14 6. "Commissioner" means the commissioner of 2 15 insurance or the deputy administrator authorized in 2 16 section 523A.801 to the extent the commissioner 2 17 delegates functions to the deputy administrator. 2 18 7. "Common business enterprise" means a group of 2 19 two or more business entities that share common 2 20 ownership in excess of fifty percent. 2 21 8. "Credit sale" means a sale of goods, services, 2 22 or an interest in land in which all of the following 2 23 are applicable: 2 24 a. Credit is granted either under a seller credit 2 25 card or by a seller who regularly engages as a seller 2 26 in credit transactions of the same kind. 2 27 b. The buyer is a person other than an 2 28 organization. 2 29 c. The goods, services, or interest in land are 2 30 purchased primarily for a personal, family, or 2 31 household purpose. 2 32 d. Either the debt is payable in installments or a 2 33 finance charge is made. 2 34 e. For goods and services, the amount financed 2 35 does not exceed twenty-five thousand dollars. 2 36 9. "Delivery" occurs when: 2 37 a. The cemetery merchandise, funeral merchandise, 2 38 or the title document establishing an easement for 2 39 burial rights is physically delivered to the purchaser 2 40 or installed, except that burial of any item at the 2 41 site of its ultimate use shall not constitute delivery 2 42 for purposes of this chapter. 2 43 b. If authorized by a purchaser under a purchase 2 44 agreement, cemetery merchandise has been permanently 2 45 identified with the name of the purchaser or the 2 46 beneficiary and delivered to a bonded warehouse or 2 47 storage facility approved by the commissioner and both 2 48 title to the merchandise and a warehouse receipt have 2 49 been delivered to the purchaser or beneficiary and a 2 50 copy of the warehouse receipt has been delivered to 3 1 the establishment for retention in its files. 3 2 c. If authorized by a purchaser under a purchase 3 3 agreement, a polystyrene or polypropylene outer burial 3 4 container has been permanently identified with the 3 5 name of the purchaser or the beneficiary and delivered 3 6 to a bonded warehouse or storage facility approved by 3 7 the commissioner and both title to the merchandise and 3 8 a warehouse receipt have been delivered to the 3 9 purchaser or beneficiary and a copy of the warehouse 3 10 receipt has been delivered to the establishment for 3 11 retention in its files. 3 12 10. "Doing business in this state" means issuing 3 13 or performing wholly or in part any term of a purchase 3 14 agreement executed within the state of Iowa. 3 15 11. "Establishment" means each business 3 16 establishment that advertises, sells, promotes, or 3 17 offers cemetery merchandise, funeral merchandise, 3 18 funeral services, or a combination thereof prior to 3 19 the death of the person named or implied in a purchase 3 20 agreement. 3 21 12. "Financial institution" means a state or 3 22 federally insured bank, savings and loan association, 3 23 credit union, trust department thereof, or a trust 3 24 company authorized to do business within this state 3 25 and which has been granted trust powers under the laws 3 26 of this state or the United States, which holds funds 3 27 under a trust agreement. "Financial institution" does 3 28 not include: 3 29 a. A seller. 3 30 b. Anyone employed by or directly involved with 3 31 the seller in the seller's cemetery merchandise, 3 32 funeral merchandise, or funeral services business. 3 33 13. "Funeral merchandise" means personal property 3 34 used for the final disposition of a dead human body, 3 35 including but not limited to clothing, caskets, 3 36 vaults, urns, and interment receptacles. "Funeral 3 37 merchandise" does not include easements for burial 3 38 rights in a completed space or cemetery merchandise. 3 39 14. "Funeral services" means services provided for 3 40 the final disposition of a dead human body, including 3 41 but not limited to services necessarily or customarily 3 42 provided for a funeral, or for the interment, 3 43 entombment, or cremation of a dead human body, or any 3 44 combination thereof. "Funeral services" does not 3 45 include perpetual care or maintenance. 3 46 15. "Inner burial container" means a container in 3 47 which human remains are placed for burial or 3 48 entombment. Where only one container is used for 3 49 burial or entombment, "inner burial container" 3 50 includes a container serving as a burial vault, urn 4 1 vault, grave box, grave liner, or lawn crypt. 4 2 16. "Insolvent" means the inability to pay debts 4 3 as they become due in the usual course of business. 4 4 17. "Interest or income" means unrealized net 4 5 appreciation or loss in the fair value of cemetery 4 6 merchandise, funeral merchandise, and funeral services 4 7 trust assets for which a market value may be 4 8 determined with reasonable certainty, plus the return 4 9 in money or property derived from the use of trust 4 10 principal or income, net of investment losses, taxes, 4 11 and expenses incurred in the sale of trust assets, any 4 12 cost of the operation of the trust, and any annual 4 13 audit fee. "Interest or income" includes but is not 4 14 limited to: 4 15 a. Rent of real or personal property, including 4 16 sums received for cancellation or renewal of a lease 4 17 and any royalties. 4 18 b. Interest on money lent, including sums received 4 19 as consideration for prepayment of principal. 4 20 c. Cash dividends paid on corporate stock. 4 21 d. Interest paid on deposit funds or debt 4 22 obligations. 4 23 e. Gain realized from the sale of trust assets. 4 24 18. "Next of kin" means the surviving spouse and 4 25 heirs at law of the deceased. 4 26 19. "Nonguaranteed" means that the price of the 4 27 merchandise and services selected has not been fixed 4 28 or guaranteed and will be determined by existing 4 29 prices at the time the merchandise and services are 4 30 delivered or provided. 4 31 20. "Outer burial container" means a container 4 32 used for the burial of human remains that is used 4 33 exclusively to surround or enclose an inner burial 4 34 container and to support the earth above the 4 35 container, commonly known as a burial vault, urn 4 36 vault, grave box, or grave liner, but not including a 4 37 lawn crypt. 4 38 21. "Parent company" means a corporation that has 4 39 a controlling interest in an establishment. 4 40 22. "Person" means an individual, business, 4 41 corporation, trust, firm, partnership, association, or 4 42 any other legal entity. 4 43 23. "Personal representative" means a personal 4 44 representative as defined in section 633.3. 4 45 24. "Provider" means a person that provides 4 46 funeral services, funeral merchandise, or cemetery 4 47 merchandise purchased in a purchase agreement. 4 48 25. "Purchase agreement" means an agreement to 4 49 furnish cemetery merchandise, funeral merchandise, 4 50 funeral services, or a combination thereof when 5 1 performance or delivery may be more than one hundred 5 2 twenty days following the initial payment on the 5 3 account. 5 4 26. "Purchase price" means the negotiated price 5 5 for the item of merchandise or service, if itemized in 5 6 the purchase agreement, or the price of the item 5 7 listed in the seller's general price list at the time 5 8 the purchase agreement is signed. 5 9 27. "Purchaser" means a person who purchases 5 10 cemetery merchandise, funeral merchandise, funeral 5 11 services, or a combination thereof. The purchaser 5 12 need not be a beneficiary of the agreement. 5 13 28. "Seller" means a person doing business within 5 14 this state, including a person doing business within 5 15 this state who sells insurance, who advertises, sells, 5 16 promotes, or offers to furnish cemetery merchandise, 5 17 funeral merchandise, funeral services, or a 5 18 combination thereof when performance or delivery may 5 19 be more than one hundred twenty days following the 5 20 initial payment on the account whether the transaction 5 21 is completed or offered in person, through the mail, 5 22 over the telephone, by the internet, or through any 5 23 other means of commerce. "Seller" includes any person 5 24 performing any term of a purchase agreement executed 5 25 within this state, and any person identified under a 5 26 burial account as the provider of cemetery 5 27 merchandise, funeral merchandise, funeral services, or 5 28 a combination thereof. 5 29 29. "Total purchase price" means the aggregate 5 30 amount the purchaser is obligated to pay for 5 31 merchandise or services pursuant to the purchase 5 32 agreement, excluding any taxes, administrative 5 33 charges, or financing charges. 5 34 SUBCHAPTER 2 5 35 ESTABLISHMENT OF TRUSTS, DEPOSIT, INVESTMENT, 5 36 AND REPORTING REQUIREMENTS 5 37 Sec. . NEW SECTION. 523A.201 ESTABLISHMENT OF 5 38 TRUST FUNDS. 5 39 Unless proceeding under section 523A.401, 523A.402, 5 40 or 523A.403, a seller must establish a trust fund 5 41 prior to advertising, selling, promoting, or offering 5 42 cemetery merchandise, funeral merchandise, funeral 5 43 services, or a combination thereof in this state as 5 44 follows: 5 45 1. The trust fund must be established at a 5 46 financial institution. 5 47 2. If a seller agrees to furnish cemetery 5 48 merchandise, funeral merchandise, funeral services, or 5 49 a combination thereof and performance or delivery may 5 50 be more than one hundred twenty days following the 6 1 initial payment on the account, a minimum of eighty 6 2 percent of all payments made under the purchase 6 3 agreement shall be placed and remain in trust until 6 4 the person for whose benefit the funds were paid dies. 6 5 3. If a purchase agreement for cemetery 6 6 merchandise, funeral merchandise, funeral services, or 6 7 a combination thereof provides that payments are to be 6 8 made in installments, the seller shall deposit eighty 6 9 percent of each payment in the trust fund until the 6 10 full amount required to be placed in trust has been 6 11 deposited. If the purchase agreement is financed with 6 12 or sold to a financial institution, the purchase 6 13 agreement shall be considered paid in full and the 6 14 trust requirements shall be satisfied within fifteen 6 15 days after the close of the month in which the seller 6 16 receives funds from the financial institution. 6 17 4. A seller shall not invade the trust principal 6 18 for any purpose. 6 19 5. A seller who lacks insurance coverage which 6 20 protects against the loss of purchaser payments not 6 21 placed in trust within the time period required by 6 22 this section and section 523A.202 shall not commingle 6 23 these payments with any other seller funds. A seller 6 24 who lacks insurance coverage may use one or more of 6 25 the following methods to dispose of these payments: 6 26 a. Deposit purchaser funds into an escrow account 6 27 until the required amount has been deposited into a 6 28 trust account at a financial institution. 6 29 b. Make a prior delivery or warehouse cemetery or 6 30 funeral merchandise or a combination thereof as 6 31 provided by this chapter. 6 32 c. Make a prior filing of a surety bond in lieu of 6 33 establishing a trust fund as required by this section. 6 34 d. Make a simultaneous, same-day deposit of the 6 35 purchaser's payments into the seller's bank account 6 36 and the required amount into the seller's trust fund. 6 37 6. Payments otherwise subject to this section are 6 38 not exempt merely because they are held in 6 39 certificates of deposit. 6 40 7. Commingling of trust funds with other funds of 6 41 the seller is prohibited. 6 42 8. Interest or income earned on amounts deposited 6 43 in trust shall remain in trust under the same terms 6 44 and conditions as payments made under the purchase 6 45 agreement, except that the seller may withdraw so much 6 46 of the interest or income as represents the difference 6 47 between the amount needed to adjust the trust funds 6 48 for inflation as set by the commissioner based on the 6 49 consumer price index and the interest or income earned 6 50 during the preceding year not to exceed fifty percent 7 1 of the total interest or income on a calendar-year 7 2 basis. The early withdrawal of interest or income 7 3 under this provision does not affect the purchaser's 7 4 right to a credit of such interest or income in the 7 5 event of a nonguaranteed price agreement, 7 6 cancellation, or nonperformance by the seller. 7 7 9. The commissioner may require amendments to a 7 8 trust agreement not in accord with the provisions of 7 9 this chapter. 7 10 10. If a seller voluntarily or involuntarily 7 11 ceases doing business and the seller's obligation to 7 12 provide merchandise or services has not been assumed 7 13 by another establishment holding a current 7 14 establishment permit, all trust funds, including 7 15 accrued interest or income, shall be repaid to the 7 16 purchaser within one hundred twenty days following the 7 17 seller's cessation of business or, in the event of 7 18 circumstances where a payment is not possible within 7 19 one hundred twenty days, as soon as is reasonably 7 20 practicable. 7 21 Sec. . NEW SECTION. 523A.202 TRUST FUND 7 22 DEPOSIT REQUIREMENTS. 7 23 1. All funds held in trust pursuant to section 7 24 523A.201 shall be deposited in a financial 7 25 institution, within fifteen days after the close of 7 26 the month a seller receives the funds. The financial 7 27 institution shall hold the funds for the designated 7 28 beneficiary until released. 7 29 2. All funds required to be deposited by the 7 30 purchaser for a purpose described in section 523A.201 7 31 shall be deposited consistent with one of the 7 32 following methods: 7 33 a. The payments shall be deposited directly into 7 34 an interest-bearing burial account in the purchaser's 7 35 name. 7 36 b. The purchaser shall deposit payments directly 7 37 into a separate trust account in the purchaser's name. 7 38 The account may be made payable to the seller upon the 7 39 death of the purchaser or the designated beneficiary, 7 40 provided that, until death, the purchaser retains the 7 41 exclusive power to hold, manage, pledge, and invest 7 42 the trust account funds and may revoke the trust and 7 43 withdraw the funds, in whole or in part, at any time 7 44 during the term of the agreement. 7 45 c. The purchaser or the seller shall deposit 7 46 payments directly into a separate trust account in the 7 47 name of the purchaser, as trustee, for the named 7 48 beneficiary, to be held, invested, and administered as 7 49 a trust account for the benefit and protection of the 7 50 beneficiary. The depositor shall notify the financial 8 1 institution of the existence and terms of the trust, 8 2 including at a minimum, the name of each party to the 8 3 agreement, the name and address of the trustee, and 8 4 the name and address of the beneficiary. The account 8 5 may be made payable to the seller upon the 8 6 beneficiary's death. 8 7 d. The payments shall be deposited in the name of 8 8 the trustee, as trustee, under the terms of a master 8 9 trust agreement and the trustee may invest, reinvest, 8 10 exchange, retain, sell, and otherwise manage the trust 8 11 fund for the benefit and protection of the named 8 12 beneficiary. 8 13 3. The commissioner may by rule authorize other 8 14 methods of deposit upon a finding that such methods 8 15 provide equivalent safety of the principal and 8 16 interest or income and the seller lacks access to the 8 17 proceeds prior to performance. 8 18 4. This section does not prohibit moving trust 8 19 funds from one financial institution to another. 8 20 Sec. . NEW SECTION. 523A.203 FINANCIAL 8 21 INSTITUTION TRUSTEE QUALIFICATION AND INVESTMENT 8 22 REQUIREMENTS. 8 23 1. A financial institution may serve as a trustee 8 24 if granted those powers under the laws of this state 8 25 or of the United States. A financial institution 8 26 acting as a trustee of trust funds under this chapter 8 27 shall invest the funds in accordance with applicable 8 28 law. 8 29 2. A financial institution acting as a trustee of 8 30 trust funds under this chapter has a fiduciary duty to 8 31 make reasonable investment decisions and to properly 8 32 oversee and manage the funds entrusted to it. The 8 33 trustee shall use the judgment and care under the 8 34 circumstances then prevailing that persons of 8 35 prudence, discretion, and intelligence exercise in the 8 36 management of their own affairs, not in regard to 8 37 speculation but in regard to the permanent disposition 8 38 of their funds, considering the probable income as 8 39 well as the probable safety of their capital. The 8 40 commissioner may take enforcement action against a 8 41 financial institution in its capacity as trustee for a 8 42 breach of fiduciary duty proven under this chapter. 8 43 3. Moneys deposited under a master trust agreement 8 44 may be commingled by the financial institution for 8 45 investment purposes if each deposit includes a 8 46 detailed listing of the amount deposited in trust for 8 47 each beneficiary and maintenance of a separate 8 48 accounting of each purchaser's principal, interest, 8 49 and income. 8 50 4. Subject to a master trust agreement, the seller 9 1 may appoint an independent investment adviser to 9 2 advise the financial institution about investment of 9 3 the trust funds. 9 4 5. Subject to agreement between the parties, the 9 5 financial institution may receive a reasonable fee 9 6 from the trust funds for services rendered as trustee. 9 7 The trust shall pay the trust operation costs and any 9 8 annual audit fees. 9 9 6. The seller or any officer, director, agent, 9 10 employee, or affiliate of the seller shall not serve 9 11 as trustee. A financial institution holding trust 9 12 funds shall not do any of the following: 9 13 a. Be owned, under the control of, or affiliated 9 14 with a seller. 9 15 b. Use any funds required to be held in trust 9 16 under this chapter or chapter 566A to purchase an 9 17 interest in any contract or agreement to which a 9 18 seller is a party. 9 19 c. Otherwise invest, directly or indirectly, in a 9 20 seller's business operations. 9 21 Sec. . NEW SECTION. 523A.204 ESTABLISHMENT 9 22 ANNUAL REPORTING REQUIREMENTS. 9 23 1. An establishment shall file with the 9 24 commissioner not later than March 1 of each year an 9 25 annual report on a form prescribed by the commissioner 9 26 containing all of the following: 9 27 a. The seller's name and address and the name and 9 28 address of the establishment that will provide the 9 29 cemetery merchandise, funeral merchandise, funeral 9 30 services, or a combination thereof. 9 31 b. The balance of each trust account as of the end 9 32 of the preceding calendar year, identified by 9 33 purchaser or beneficiary name. 9 34 c. A report of any amounts withdrawn from the 9 35 trust account including the reason for each 9 36 withdrawal. 9 37 d. A detailed listing of the insurance funding 9 38 outstanding at the end of the preceding calendar year, 9 39 identified by the name of the purchaser or the 9 40 beneficiary. 9 41 e. A complete inventory of the cemetery 9 42 merchandise, funeral merchandise, or a combination 9 43 thereof delivered in lieu of trust fund requirements 9 44 under section 523A.401, including the following: 9 45 (1) The location of the merchandise. 9 46 (2) Merchandise serial numbers or warehouse 9 47 receipt numbers identified by the name of the 9 48 purchaser or the beneficiary. 9 49 (3) A verified statement of a certified public 9 50 accountant on a form prescribed by the commissioner 10 1 that all of the following have occurred: 10 2 (a) A physical inventory of the cemetery 10 3 merchandise or funeral merchandise has been conducted. 10 4 (b) Each item of that merchandise is in the 10 5 seller's possession at the specified location. 10 6 f. The purchaser and beneficiary names, the amount 10 7 of each purchase agreement made in the preceding year, 10 8 and the date the purchase agreement was made. 10 9 g. A summary of any purchase agreements converted 10 10 from trust-funded benefits to insurance-funded or 10 11 annuity benefits during the preceding year which shall 10 12 include, as of the conversion date, the following 10 13 information, as well as aggregated totals for each of 10 14 the following categories of information, if 10 15 appropriate: 10 16 (1) Insured's name. 10 17 (2) Insured's policy number. 10 18 (3) Original prepaid purchase agreement amount. 10 19 (4) Amount paid in. 10 20 (5) Unpaid balance of the prepaid purchase 10 21 agreement. 10 22 (6) Unpaid balance of the purchase agreement. 10 23 (7) Amount retained by the establishment. 10 24 (8) Amount applied to the purchase of the 10 25 insurance policy or annuity. 10 26 (9) Initial cash surrender value and initial death 10 27 benefit under the insurance policy. 10 28 The establishment shall include a notarized 10 29 statement attesting that the insurance policies or 10 30 annuities have been issued and funded on behalf of the 10 31 purchasers listed in the summary and that all notices 10 32 required under this section have been given. 10 33 h. A summary of any purchase agreements converted 10 34 from trust-funded benefits to a surety bond during the 10 35 preceding year which shall include, as of the 10 36 conversion date, the following information, as well as 10 37 aggregated totals for each of the following categories 10 38 of information, if appropriate: 10 39 (1) Name of the purchaser and beneficiary. 10 40 (2) Original prepaid purchase agreement amount. 10 41 (3) Amount paid in. 10 42 (4) Unpaid balance of the prepaid purchase 10 43 agreement. 10 44 (5) Unpaid balance of the purchase agreement. 10 45 (6) Amount retained by the establishment. 10 46 (7) Amount applied to the purchase of the surety 10 47 bond. 10 48 (8) A description of the surety bond and the 10 49 applicable amount of coverage. 10 50 i. Any other information the commissioner deems 11 1 necessary for the administration of this chapter. 11 2 2. A person holding multiple establishment permits 11 3 may elect to file only one annual report after noting 11 4 all establishments on the report. 11 5 3. An establishment shall make a good faith effort 11 6 to complete the annual report. The establishment 11 7 shall note on the annual report any information not 11 8 reasonably available to the establishment as an 11 9 exception or variance. Account balances within twelve 11 10 months of the date of the filing of the annual report 11 11 shall be accepted if the actual date of the account 11 12 balances is noted. 11 13 4. In lieu of the annual report form described in 11 14 subsection 1, the commissioner may authorize an 11 15 establishment to file a short form annual report on a 11 16 form prescribed by the commissioner. The short form 11 17 annual report may incorporate by reference information 11 18 readily available to the establishment. The 11 19 commissioner may certify and decertify establishments 11 20 authorized to file the short form based upon: 11 21 a. The establishment's recordkeeping system. 11 22 b. The number of purchase agreements which the 11 23 establishment has sold that are subject to regulation 11 24 under chapter 523A. 11 25 c. The availability and accessibility of 11 26 information at the establishment for purchase 11 27 agreements subject to regulation. 11 28 d. Whether the establishment places one hundred 11 29 percent of funds received pursuant to its purchase 11 30 agreements in trust. 11 31 e. The findings of the commissioner concerning 11 32 audits and consumer complaints. 11 33 The commissioner shall retain the authority to 11 34 require establishments permitted to file the short 11 35 form annual report to provide all of the information 11 36 required in the annual report form required by 11 37 subsection 1 for audit purposes or otherwise. 11 38 5. An establishment filing an annual report shall 11 39 pay a filing fee of ten dollars per purchase agreement 11 40 sold during the year covered by the report. The fee 11 41 does not apply to any of the following: 11 42 a. A purchase agreement where the beneficiary dies 11 43 in the same year the agreement was sold. 11 44 b. Any modifications or additions, such as 11 45 payments, for an existing purchase agreement sold in a 11 46 previous year. 11 47 c. An additional agreement purchased and already 11 48 reported to the commissioner by the purchaser. 11 49 d. A purchase agreement canceled or revoked in the 11 50 same year it was sold. 12 1 All purchase agreement changes for which a filing 12 2 fee is not required must be reported to the 12 3 commissioner on the annual report for the year 12 4 covered. 12 5 6. As part of the annual filing with the 12 6 commissioner, an establishment shall file an 12 7 authorization for the commissioner or a designee to 12 8 investigate, audit, and verify all funds, accounts, 12 9 safe deposit boxes, and other evidence of 12 10 establishment trust funds held by or in a financial 12 11 institution. 12 12 7. Forms may be obtained at cost from the 12 13 commissioner upon request. The commissioner may 12 14 accept annual reports submitted in an electronic 12 15 format, including but not limited to computer 12 16 diskettes. 12 17 8. Notwithstanding chapter 22, all records 12 18 maintained by the commissioner under this section 12 19 shall be confidential and shall not be made available 12 20 for inspection or copying except upon approval of the 12 21 commissioner or the attorney general. 12 22 Sec. . NEW SECTION. 523A.205 FINANCIAL 12 23 INSTITUTION ANNUAL REPORTING REQUIREMENTS. 12 24 1. A financial institution shall file with the 12 25 commissioner not later than March 1 of each year an 12 26 annual report on a form prescribed by the commissioner 12 27 showing all funds deposited by an establishment under 12 28 a trust agreement during the previous year. Each 12 29 report shall contain all information requested. 12 30 2. Forms may be obtained from the commissioner 12 31 upon request. The commissioner may accept annual 12 32 reports submitted in an electronic format, including 12 33 but not limited to computer diskettes. 12 34 3. Notwithstanding chapter 22, all records 12 35 maintained by the commissioner under this section 12 36 shall be confidential and shall not be made available 12 37 for inspection or copying except upon approval of the 12 38 commissioner or the attorney general. 12 39 Sec. . NEW SECTION. 523A.206 AUDITS. 12 40 1. The commissioner may make audits of the 12 41 establishment and of the records of a seller, at the 12 42 times and in the scope the commissioner determines. 12 43 The audits may be made without prior notice to the 12 44 seller. The commissioner may copy all records the 12 45 commissioner feels are necessary to conduct the audit. 12 46 The commissioner may require an audit of a seller or 12 47 other person by a certified public accountant to 12 48 verify compliance with this chapter, implementing 12 49 rules, or orders. 12 50 2. A seller or other person shall pay for the 13 1 audit unless the commissioner waives this requirement. 13 2 The cost of an audit involving multiple sellers or 13 3 other persons shall be prorated among them upon any 13 4 reasonable basis as determined by the commissioner. 13 5 The accountant shall deliver the audit report to the 13 6 commissioner and to the seller or other persons. 13 7 3. The commissioner shall not make public the 13 8 information obtained in the course of an audit, except 13 9 when a duty under this chapter requires the 13 10 commissioner to take action against a seller or to 13 11 cooperate with another enforcement or regulatory 13 12 agency, or except when the commissioner is called as a 13 13 witness in a civil or criminal proceeding. 13 14 SUBCHAPTER 3 13 15 DISBURSEMENT OF REMAINING BURIAL ACCOUNT FUNDS, 13 16 BURIAL TRUST FUNDS, AND INSURANCE OR ANNUITY PROCEEDS 13 17 UNDER THE REQUIREMENTS OF SECTION 249A.5 13 18 Sec. . NEW SECTION. 523A.301 DEFINITION. 13 19 As used in sections 523A.302 and 523A.303, 13 20 "director" means the director of human services. 13 21 Sec. . NEW SECTION. 523A.302 IDENTIFICATION 13 22 OF MERCHANDISE AND SERVICE PROVIDER. 13 23 If a burial trust fund identifies, either in the 13 24 trust fund records or in a related purchase agreement, 13 25 the seller who will provide the cemetery merchandise, 13 26 funeral merchandise, funeral services or a combination 13 27 thereof, the trust fund records or the related 13 28 purchase agreements must contain a statement signed by 13 29 an authorized representative of the seller agreeing to 13 30 furnish the cemetery merchandise, funeral merchandise, 13 31 funeral services, or a combination thereof upon the 13 32 death of the beneficiary. The burial trust fund shall 13 33 not identify a specific seller as payee unless the 13 34 trust fund records or the related purchase agreements, 13 35 if any, contain the signature of an authorized 13 36 representative of the seller and, if the agreement is 13 37 for funeral services as defined in chapter 156, the 13 38 name of a funeral director licensed to deliver those 13 39 services. A person may enter into agreements 13 40 authorizing the establishment of more than one burial 13 41 trust fund and agreeing to furnish the applicable 13 42 merchandise and services. 13 43 Sec. . NEW SECTION. 523A.303 DISBURSEMENT OF 13 44 REMAINING FUNDS. 13 45 1. If funds remain in a nonguaranteed irrevocable 13 46 burial trust fund or from the proceeds of an insurance 13 47 policy or annuity made payable or assigned to the 13 48 seller or a provider after the payment of funeral and 13 49 burial expenses in accordance with the conditions and 13 50 terms of the purchase agreement for cemetery 14 1 merchandise, funeral merchandise, or funeral services, 14 2 the seller shall comply with all of the following: 14 3 a. The seller shall provide written notice by mail 14 4 to the director under subsection 2. 14 5 b. At least sixty days after mailing notice to the 14 6 director, the seller shall disburse any remaining 14 7 funds from the burial trust fund as follows: 14 8 (1) If within the sixty-day period the seller 14 9 receives a claim from the personal representative of 14 10 the deceased, any remaining funds shall be disbursed 14 11 to the personal representative, notwithstanding any 14 12 claim by the director. 14 13 (2) If within the sixty-day period the seller has 14 14 not received a claim from the personal representative 14 15 of the deceased but receives a claim from the 14 16 director, the seller shall disburse the remaining 14 17 funds up to the amount of the claim to the director. 14 18 (3) Any remaining funds not disposed of pursuant 14 19 to subparagraphs (1) and (2) shall be disbursed to any 14 20 person who is identified as the next of kin of the 14 21 deceased in an affidavit submitted in accordance with 14 22 subsection 5. 14 23 2. The notice mailed to the director shall meet 14 24 all of the following requirements and is subject to 14 25 all of the following conditions: 14 26 a. The notice shall be mailed with postage 14 27 prepaid. 14 28 b. If the notice is sent by regular mail, the 14 29 sixty-day period for receipt of a response is deemed 14 30 to commence three days following the date of mailing. 14 31 c. If the notice is sent by certified mail, the 14 32 sixty-day period for receipt of a response is deemed 14 33 to commence on the date of mailing. 14 34 d. The notice shall provide all of the following 14 35 information: 14 36 (1) Current name, address, and telephone number of 14 37 the seller. 14 38 (2) Full name of the deceased. 14 39 (3) Date of the deceased's death. 14 40 (4) Amount of funds remaining in the burial trust 14 41 fund. 14 42 (5) Statement that any claim by the director must 14 43 be received by the seller within sixty days after the 14 44 date of mailing of the notice. 14 45 e. A notice in substantially the following form 14 46 complies with this subsection: 14 47 "TO: THE DIRECTOR OF HUMAN SERVICES 14 48 FROM: (SELLER'S NAME, CURRENT ADDRESS, AND 14 49 TELEPHONE NUMBER) 14 50 YOU ARE HEREBY NOTIFIED THAT (NAME OF DECEASED), 15 1 WHO HAD AN IRREVOCABLE BURIAL TRUST FUND, HAS DIED, 15 2 THAT FINAL PAYMENT FOR CEMETERY MERCHANDISE, FUNERAL 15 3 MERCHANDISE, AND FUNERAL SERVICES HAS BEEN MADE, AND 15 4 THAT (REMAINING AMOUNT) REMAINS IN THE IRREVOCABLE 15 5 BURIAL TRUST FUND. 15 6 THE ABOVE-NAMED SELLER MUST RECEIVE A WRITTEN 15 7 RESPONSE REGARDING ANY CLAIM BY THE DIRECTOR WITHIN 15 8 SIXTY DAYS AFTER THE MAILING OF THIS NOTICE TO THE 15 9 DIRECTOR. 15 10 IF THE ABOVE-NAMED SELLER DOES NOT RECEIVE A 15 11 WRITTEN RESPONSE REGARDING A CLAIM BY THE DIRECTOR 15 12 WITHIN SIXTY DAYS AFTER THE MAILING OF THIS NOTICE, 15 13 THE SELLER MAY DISPOSE OF THE REMAINING FUNDS IN 15 14 ACCORDANCE WITH SECTION 523A.303, CODE OF IOWA." 15 15 3. Upon receipt of the seller's written notice, 15 16 the director shall determine if a debt is due the 15 17 department of human services pursuant to section 15 18 249A.5. If the director determines that a debt is 15 19 owing, the director shall provide a written response 15 20 to the seller within sixty days after the mailing of 15 21 the seller's notice. If the director does not respond 15 22 with a claim within the sixty-day period, any claim 15 23 made by the director shall not be enforceable against 15 24 the seller, the trust, or a trustee. 15 25 4. A personal representative who wishes to make a 15 26 claim shall send written notice of the claim to the 15 27 seller. If the seller does not receive any claim from 15 28 a personal representative within the sixty-day period 15 29 provided for response by the director regarding a 15 30 claim, the claim of the personal representative shall 15 31 not be enforceable against the seller, the trust, or a 15 32 trustee. 15 33 5. Any person other than a personal representative 15 34 or the director claiming an interest in the remaining 15 35 funds shall submit an affidavit claiming an interest 15 36 which provides the following information: 15 37 a. Full name, current address, and telephone 15 38 number of the claimant. 15 39 b. Claimant's relationship to the deceased. 15 40 c. Name of any surviving next of kin of the 15 41 deceased, and the relationship of any named surviving 15 42 next of kin. 15 43 d. That the claimant has no knowledge of the 15 44 existence of a personal representative for the 15 45 deceased's estate. 15 46 6. The seller may retain not more than fifty 15 47 dollars of the remaining funds in the burial trust 15 48 fund for the administrative expenses associated with 15 49 the requirements of this section. 15 50 7. If the funds remaining in a burial trust fund 16 1 are disbursed under the requirements of this section, 16 2 the seller, the provider, the burial trust fund, and 16 3 any trustee shall not be liable to the director, the 16 4 estate of the deceased, any personal representative, 16 5 or any other interested person for the remaining funds 16 6 and any lien imposed by the director shall be 16 7 unenforceable against the seller, the burial trust 16 8 fund, or any trustee. 16 9 SUBCHAPTER 4 16 10 TRUSTING ALTERNATIVES 16 11 Sec. . NEW SECTION. 523A.401 PURCHASE 16 12 AGREEMENTS FUNDED BY INSURANCE PROCEEDS. 16 13 1. A purchase agreement may be funded by insurance 16 14 proceeds derived from a new or existing insurance 16 15 policy issued by an insurance company authorized to do 16 16 business and doing business within this state. 16 17 2. Such funding may be in lieu of the trusting 16 18 requirements of this chapter when the purchaser 16 19 assigns the proceeds of an existing insurance policy. 16 20 3. Such funding may be in lieu of the trusting 16 21 requirements of this chapter when a new insurance 16 22 policy is purchased to fund the purchase agreement, 16 23 with a face amount equal to or greater than the 16 24 current retail price of the cemetery merchandise, 16 25 funeral merchandise, and funeral services to be 16 26 delivered under the purchase agreement or, if less, a 16 27 face amount equal to the total of all payments to be 16 28 submitted by the purchaser pursuant to the purchase 16 29 agreement. 16 30 4. The premiums of any new insurance policy shall 16 31 be fully paid within thirty days after execution of 16 32 the purchase agreement or, with respect to a purchase 16 33 agreement that provides for periodic payments, the 16 34 premiums shall be paid directly by the purchaser to 16 35 the insurance company issuing the policy. 16 36 5. Any new insurance policy shall satisfy the 16 37 following conditions: 16 38 a. Except as necessary and appropriate to satisfy 16 39 the requirements regarding burial trust funds under 16 40 Title XIX of the federal Social Security Act, the 16 41 policy shall not be owned by the establishment, the 16 42 policy shall not be irrevocably assigned to the 16 43 establishment, and the assignment of proceeds from the 16 44 insurance policy to the establishment shall be limited 16 45 to the establishment's interests as they appear in the 16 46 purchase agreement, and conditioned on the 16 47 establishment's delivery of cemetery merchandise, 16 48 funeral merchandise, and funeral services pursuant to 16 49 a purchase agreement. 16 50 b. The policy shall provide that any assignment of 17 1 benefits is contingent upon the establishment's 17 2 delivery of cemetery merchandise, funeral merchandise, 17 3 and funeral services pursuant to a purchase agreement. 17 4 c. The policy shall have an increasing death 17 5 benefit or similar feature that provides some means 17 6 for increasing the funding as the cost of funeral and 17 7 cemetery goods and services increases. 17 8 6. With the written consent of the purchaser, an 17 9 existing prepaid purchase agreement with trust-funded 17 10 benefits may be converted to a prepaid purchase 17 11 agreement with insurance-funded benefits provided the 17 12 establishment and the insurance benefits comply with 17 13 the following provisions: 17 14 a. The transfer of the trust funds to the 17 15 insurance company must be at least equal to the full 17 16 sum required to be deposited as trust principal under 17 17 the trust-funded prepaid purchase agreement plus all 17 18 net earnings accumulated with respect thereto, as of 17 19 the transfer date. Commissions, allowances, surrender 17 20 charges or other forms of compensation or expense 17 21 loads, premium expense, administrative charges or 17 22 expenses, or policy fees shall not be deducted from 17 23 the trust funds transferred pursuant to the 17 24 conversion. 17 25 b. The face amount of any insurance policy issued 17 26 on an individual must be no less than the amount of 17 27 principal and interest transferred for that individual 17 28 to the insurance company, and any supplemental 17 29 insurance policy issued to cover the unfunded portion 17 30 of the purchase agreement must have a face amount that 17 31 is at least as great as the unfunded principal 17 32 balance. The face amount of the insurance purchased 17 33 shall not, under any circumstances, be less than the 17 34 total of all payments made by the purchaser pursuant 17 35 to the agreement plus all net earnings accumulated 17 36 with respect thereto, as of the transfer date. 17 37 c. The insurance policy shall not allow for 17 38 contesting coverage, limit death benefits in the case 17 39 of suicide, refer to physical examination, or 17 40 otherwise operate as an exclusion, limitation, or 17 41 condition other than requiring submission of proof of 17 42 death or surrender of policy at the time the prepaid 17 43 purchase agreement is funded, matures, or is canceled, 17 44 as the case may be. 17 45 d. The establishment shall maintain a copy of any 17 46 prepaid trust-funded purchase agreement that was 17 47 converted to a prepaid insurance-funded purchase 17 48 agreement and retain the payment history records for 17 49 each converted purchase agreement prior to conversion 17 50 until the cemetery merchandise, funeral merchandise, 18 1 and funeral services have been delivered. 18 2 7. The seller of a purchase agreement subject to 18 3 this chapter which is to be funded by insurance 18 4 proceeds shall obtain all permits required to be 18 5 obtained and comply with all reporting requirements 18 6 under this chapter. 18 7 8. An insurance company issuing policies funding 18 8 purchase agreements subject to this chapter shall file 18 9 an annual report with the commissioner on a form 18 10 prescribed by the commissioner. The report shall list 18 11 the applicable insurance policies outstanding for each 18 12 establishment. Computer printouts may be submitted so 18 13 long as each legibly provides the same information 18 14 required in the prescribed form. 18 15 Sec. . NEW SECTION. 523A.402 PURCHASE 18 16 AGREEMENTS FUNDED BY ANNUITY PROCEEDS. 18 17 1. A purchase agreement may be funded by proceeds 18 18 derived from a new or existing annuity issued by an 18 19 insurance company authorized to do business and doing 18 20 business within this state. 18 21 2. Such funding may be in lieu of the trust 18 22 requirements of this chapter when the purchaser 18 23 assigns the proceeds of an existing annuity. 18 24 3. Such funding may be in lieu of the trust 18 25 requirements of this chapter when a new annuity is 18 26 purchased to fund the purchase agreement, with a face 18 27 amount equal to or greater than the current retail 18 28 price of the cemetery merchandise, funeral 18 29 merchandise, and funeral services to be delivered 18 30 under the purchase agreement or, if less, a face 18 31 amount equal to the total of all payments to be 18 32 submitted by the purchaser pursuant to the purchase 18 33 agreement. 18 34 4. The premiums of any new annuity shall be fully 18 35 paid within thirty days after execution of the 18 36 purchase agreement or, with respect to a purchase 18 37 agreement that provides for periodic payments, the 18 38 premiums shall be paid directly by the purchaser to 18 39 the insurance company issuing the annuity. 18 40 5. The annuity shall satisfy the following 18 41 conditions: 18 42 a. Except as necessary and appropriate to satisfy 18 43 the requirements regarding burial trust funds under 18 44 Title XIX of the federal Social Security Act, the 18 45 annuity shall not be owned by the establishment or 18 46 irrevocably assigned and any designation of the 18 47 establishment as a beneficiary shall not be made 18 48 irrevocable. 18 49 b. The annuity shall provide that any assignment 18 50 of benefits is contingent upon the establishment's 19 1 delivery of cemetery merchandise, funeral merchandise, 19 2 and funeral services pursuant to a purchase agreement. 19 3 c. The annuity shall have an increasing death 19 4 benefit or similar feature that provides some means 19 5 for increasing the funding as the cost of cemetery 19 6 merchandise, funeral merchandise, and funeral services 19 7 increases. 19 8 6. With the written consent of the purchaser, an 19 9 existing prepaid purchase agreement with trust-funded 19 10 benefits may be converted to a prepaid purchase 19 11 agreement with annuity-funded benefits provided the 19 12 establishment and the annuity benefits comply with the 19 13 following provisions: 19 14 a. The transfer of the trust funds to the 19 15 insurance company must be at least equal to the full 19 16 sum required to be deposited as trust principal under 19 17 the trust-funded prepaid purchase agreement plus all 19 18 net earnings accumulated with respect thereto, as of 19 19 the transfer date. Commissions, allowances, surrender 19 20 charges or other forms of compensation or expense 19 21 loads, premium expense, administrative charges or 19 22 expenses, or fees shall not be deducted from the trust 19 23 funds transferred pursuant to the conversion. 19 24 b. The face amount of any annuity issued on an 19 25 individual must be no less than the amount of 19 26 principal and interest transferred for that individual 19 27 to the insurance company, and any supplemental annuity 19 28 issued to cover the unfunded portion of the purchase 19 29 agreement must have a face amount that is at least as 19 30 great as the unfunded principal balance. The face 19 31 amount of the annuity purchased shall not, under any 19 32 circumstances, be less than the total of all payments 19 33 made by the purchaser pursuant to the agreement plus 19 34 all net earnings accumulated with respect thereto, as 19 35 of the transfer date. 19 36 c. The annuity shall not allow for contesting 19 37 coverage, limit death benefits in the case of suicide, 19 38 refer to physical examination, or otherwise operate as 19 39 an exclusion, limitation, or condition other than 19 40 requiring submission of proof of death or surrender of 19 41 the annuity at the time the prepaid purchase agreement 19 42 is funded, matures, or is canceled, as the case may 19 43 be. 19 44 d. The establishment shall maintain a copy of any 19 45 prepaid trust-funded purchase agreement that was 19 46 converted to a prepaid annuity-funded purchase 19 47 agreement and retain the payment history records for 19 48 each converted purchase agreement prior to conversion 19 49 until the cemetery merchandise, funeral merchandise, 19 50 and funeral services have been delivered. 20 1 7. The seller of a purchase agreement subject to 20 2 this chapter which is to be funded by annuity proceeds 20 3 shall obtain all permits required to be obtained and 20 4 comply with all reporting requirements under this 20 5 chapter. 20 6 8. An insurance company issuing annuities funding 20 7 purchase agreements subject to this chapter shall file 20 8 an annual report with the commissioner on a form 20 9 prescribed by the commissioner. The report shall list 20 10 the applicable annuities outstanding for each 20 11 establishment. Computer printouts may be submitted so 20 12 long as each legibly provides the same information 20 13 required in the prescribed form. 20 14 Sec. . NEW SECTION. 523A.403 PURCHASE 20 15 AGREEMENTS FUNDED BY CERTIFICATES OF DEPOSIT. 20 16 1. A purchase agreement may be funded by proceeds 20 17 derived from a certificate of deposit in the name of 20 18 the purchaser made payable to the seller upon the 20 19 purchaser's death. 20 20 2. The seller of a purchase agreement subject to 20 21 this chapter which is to be funded by a certificate of 20 22 deposit shall obtain all permits required to be 20 23 obtained and comply with all reporting requirements 20 24 under this chapter, implementing rules, and orders. 20 25 Sec. . NEW SECTION. 523A.404 MERCHANDISE 20 26 DELIVERED TO THE PURCHASER OR WAREHOUSED. 20 27 1. Trust requirements do not apply to payments for 20 28 outer burial containers made of either polystyrene or 20 29 polypropylene or cemetery merchandise delivered to the 20 30 purchaser or stored in an independent third-party 20 31 storage facility not owned or controlled by the seller 20 32 when approved by the commissioner. The seller or the 20 33 storage facility must demonstrate that they will do 20 34 all of the following: 20 35 a. Issue a receipt of ownership in the name of the 20 36 purchaser and deliver it to the purchaser. 20 37 b. Insure the merchandise against loss. 20 38 c. Protect the merchandise against damage. 20 39 d. Transfer title to the purchaser. 20 40 e. Appropriately identify and describe the 20 41 merchandise in a manner that it can be distinguished 20 42 from other similar items. 20 43 f. Use a method of storage that allows for visual 20 44 audits of the merchandise. 20 45 g. Have adequate, computerized, recordkeeping 20 46 systems in place to identify, describe, and count each 20 47 item in storage, including the ownership of each item, 20 48 and provide an aggregate listing with numerical 20 49 totals. 20 50 h. File a consent to be audited and inspected by 21 1 the commissioner. 21 2 i. Provide reports to the commissioner, annually, 21 3 by an independent certified public accountant, which 21 4 shall include a physical count of merchandise held in 21 5 storage and a review of information, including the 21 6 seller's revenue and sales records, as necessary to 21 7 verify the adequacy of the number of items held at the 21 8 storage facility. 21 9 j. Satisfy the annual reporting requirements of 21 10 section 523A.204. 21 11 2. Lawn crypts may be delivered in lieu of 21 12 trusting. For this purpose, delivery means 21 13 installation in a grave owned by the purchaser. The 21 14 seller shall do all of the following: 21 15 a. Notify the administrator before the lawn crypts 21 16 are installed. 21 17 b. Identify the intended location of the lawn 21 18 crypts within the cemetery. 21 19 c. Provide documentation adequately demonstrating 21 20 delivery has occurred. Adequate documentation 21 21 includes but is not limited to photographs and third- 21 22 party certifications. 21 23 3. Cemetery merchandise and funeral merchandise 21 24 shall not be deemed delivered to the purchaser or 21 25 warehoused if the merchandise is subject to a lien or 21 26 security interest by any party other than the seller. 21 27 4. An establishment is prohibited from requiring 21 28 delivery as a condition of the sale. 21 29 5. A seller shall provide services necessary for 21 30 the installation or burial of outer burial containers 21 31 sold by the seller. This subsection shall not require 21 32 the seller to provide for the opening or closing of 21 33 the interment or entombment space, unless the purchase 21 34 agreement provides otherwise. 21 35 Sec. . NEW SECTION. 523A.405 BOND IN LIEU OF 21 36 TRUST FUND. 21 37 1. In lieu of trust requirements, a seller may 21 38 file with the commissioner a surety bond issued by a 21 39 surety company authorized to do business and doing 21 40 business within this state. The bond must be 21 41 conditioned upon the seller's faithful performance of 21 42 purchase agreements subject to this chapter. The 21 43 surety's liability extends to each such agreement 21 44 executed while the bond is in force and until 21 45 performance or recision of the purchase agreement. To 21 46 the extent expressly agreed to in writing by the 21 47 surety, the surety's liability extends to each such 21 48 agreement subject to this chapter executed prior to 21 49 the time the bond was in force and until performance 21 50 or recision of the agreement. A purchaser aggrieved 22 1 by a breach of a condition of the bond covering the 22 2 purchaser's agreement may maintain an action against 22 3 the bond. If, at the time of the breach, the 22 4 purchaser is aware of the purchaser's rights under the 22 5 bond and how to file a claim against the bond, the 22 6 surety shall not be liable for any breach of condition 22 7 unless the surety receives notice of a claim within 22 8 sixty days following discovery of the acts, omissions, 22 9 or conditions constituting the breach of condition, 22 10 except as otherwise provided in this section. A 22 11 surety bond shall not be canceled by a surety except 22 12 upon a written notice of cancellation given by the 22 13 surety to the commissioner by restricted certified 22 14 mail, and not prior to the expiration of sixty days 22 15 after receipt of the notice by the commissioner. The 22 16 surety's liability shall extend to each purchase 22 17 agreement subject to this chapter executed prior to 22 18 cancellation of the surety bond until the seller has 22 19 complied with section 3. 22 20 2. If a seller becomes insolvent or otherwise 22 21 ceases to engage in business prior to or within sixty 22 22 days after cancellation of a bond, the seller shall be 22 23 deemed to have breached the bond conditions for 22 24 outstanding agreements under this chapter as of the 22 25 day prior to cancellation of the bond. The 22 26 commissioner shall mail written notice by restricted 22 27 certified mail to the purchaser under each outstanding 22 28 purchase agreement of the seller that a claim against 22 29 the bond must be filed with the surety company within 22 30 sixty days after the mailing date of the notice. The 22 31 surety shall cease to be liable for all purchase 22 32 agreements except those for which claims are filed 22 33 with the surety company within sixty days after the 22 34 date the commissioner mails the notices. 22 35 3. If a surety bond is canceled by a surety under 22 36 any conditions other than those specified in 22 37 subsection 2, the seller shall comply with all of the 22 38 following: 22 39 a. The seller shall comply with the trust 22 40 requirements of section 523A.201 for all purchase 22 41 agreements subject to this chapter executed on or 22 42 after the effective date of cancellation of the surety 22 43 bond. In the alternative, the seller may submit a 22 44 substitute surety bond meeting the requirements of 22 45 subsection 1, but the seller must comply with section 22 46 523A.201 for any purchase agreements executed on or 22 47 after the effective cancellation date of the earlier 22 48 surety bond and prior to the effective date of the 22 49 later surety bond. 22 50 b. Within sixty days after the effective 23 1 cancellation date of the surety bond, the seller shall 23 2 submit to the commissioner an undertaking by another 23 3 surety company that a substitute surety bond meeting 23 4 the requirements of subsection 1 is in effect and that 23 5 the liability of the substitute surety bond extends to 23 6 all outstanding purchase agreements of the seller that 23 7 were executed but not performed or extinguished prior 23 8 to the effective date of the substitute surety bond, 23 9 or the seller shall submit to the commissioner a 23 10 financial statement accompanied by an unqualified 23 11 opinion based upon an audit performed by a certified 23 12 public accountant licensed in this state certifying 23 13 the total amount of outstanding liabilities of the 23 14 seller on purchase agreements subject to this chapter 23 15 and proof of deposit by the seller in trust under 23 16 section 523A.201 of either the amount specified in 23 17 section 523A.201, including interest as set by the 23 18 commissioner based on the interest which would have 23 19 been earned had the funds been maintained in trust, 23 20 with respect to all of those outstanding purchase 23 21 agreements or, where applicable, that delivery of 23 22 merchandise has been made in compliance with section 23 23 523A.404. The surety may require such security as is 23 24 necessary to comply with this section. Upon 23 25 compliance by the seller with this paragraph, the 23 26 surety company canceling the surety bond shall cease 23 27 to be liable with respect to any outstanding purchase 23 28 agreements of the seller except those purchase 23 29 agreements with respect to which a breach of condition 23 30 occurred prior to cancellation and for which timely 23 31 claims were filed. 23 32 4. Section 523A.202, and, to the extent it is 23 33 applicable, section 523A.206, apply to sellers whose 23 34 purchase agreements are covered by a surety bond 23 35 maintained under this section, and section 523A.202 23 36 continues to apply to any purchase agreements of those 23 37 sellers that are not covered by a surety bond 23 38 maintained under this section. 23 39 5. Upon receiving a notice of cancellation of a 23 40 surety bond, the commissioner shall notify the seller 23 41 of the requirements of this chapter resulting from 23 42 cancellation of the bond. The notice may be in the 23 43 form of a copy of this section and sections 523A.201 23 44 and 523A.202. 23 45 6. Upon receiving a notice of cancellation, unless 23 46 the seller has complied with the requirements of this 23 47 section, the attorney general shall seek an injunction 23 48 to prohibit the seller from making further purchase 23 49 agreements subject to this chapter. The attorney 23 50 general shall commence an action to attach and levy 24 1 execution upon property of the seller when the seller 24 2 fails to perform a purchase agreement subject to this 24 3 chapter, to the extent necessary to secure compliance 24 4 with this chapter. The county attorney may bring 24 5 criminal charges under subchapter 7. 24 6 7. The surety under this section shall not be 24 7 owned, under the control of, or affiliated with the 24 8 seller. 24 9 8. The amount of the surety bond shall equal 24 10 eighty percent of the payments received pursuant to 24 11 purchase agreements, or the applicable portion 24 12 thereof, for cemetery merchandise, funeral 24 13 merchandise, funeral services, or a combination 24 14 thereof and the amount needed to adjust the amount of 24 15 the surety bond for inflation as set by the 24 16 commissioner based on the consumer price index. The 24 17 seller shall review the amount of the surety bond no 24 18 less than annually and shall increase the bond as 24 19 necessary to reflect additional payments. The amount 24 20 needed to adjust for inflation shall be added annually 24 21 to the surety bond during the first quarter of the 24 22 establishment's fiscal year. 24 23 9. With the consent of the purchaser, an existing 24 24 prepaid purchase agreement with trust-funded benefits 24 25 may be converted to a prepaid purchase agreement 24 26 funded by a surety bond provided the establishment and 24 27 the surety bond comply with the following provisions: 24 28 a. The amount of the trust funds transferred to 24 29 the surety company must be at least equal to the full 24 30 sum required to be deposited as trust principal under 24 31 the trust-funded prepaid purchase agreement plus all 24 32 net earnings accumulated with respect thereto, as of 24 33 the transfer date. Commissions, allowances, surrender 24 34 charges or other forms of compensation or expense 24 35 loads, premium expense, administrative charges or 24 36 expenses, or fees shall not be deducted from the trust 24 37 funds transferred pursuant to the conversion. 24 38 b. The face amount of the surety bond issued on an 24 39 individual must be no less than the amount of 24 40 principal and interest transferred for that individual 24 41 to the surety company, and any supplemental surety 24 42 bond issued to cover the unfunded portion of the 24 43 purchase agreement must have a face amount that is at 24 44 least as great as the unfunded principal balance. The 24 45 face amount of the surety bond purchased shall not, 24 46 under the circumstances, be less than the total of all 24 47 payments made by the purchaser pursuant to the 24 48 agreement plus all net earnings accumulated with 24 49 respect thereto, as of the transfer date. 24 50 c. The establishment shall maintain a copy of any 25 1 prepaid trust-funded agreement that was converted to a 25 2 prepaid purchase agreement funded by a surety bond and 25 3 retain the payment history records for each converted 25 4 purchase agreement prior to conversion until the 25 5 cemetery merchandise, funeral merchandise, and funeral 25 6 services have been delivered. 25 7 SUBCHAPTER 5 25 8 PERMIT REQUIREMENTS FOR SELLERS OF CEMETERY 25 9 MERCHANDISE, FUNERAL MERCHANDISE, FUNERAL SERVICES, 25 10 OR A COMBINATION THEREOF 25 11 Sec. . NEW SECTION. 523A.501 ESTABLISHMENT 25 12 PERMITS. 25 13 1. A person shall not advertise, sell, promote, or 25 14 offer to furnish cemetery merchandise, funeral 25 15 merchandise, funeral services, or a combination 25 16 thereof when performance or delivery may be more than 25 17 one hundred twenty days following the initial payment 25 18 on the account without an establishment permit. Each 25 19 establishment must have an establishment permit. 25 20 2. An application for an establishment permit 25 21 shall be filed on a form prescribed by the 25 22 commissioner, be accompanied by a fifty dollar filing 25 23 fee, and include a copy of each purchase agreement the 25 24 person will use for sales of cemetery merchandise, 25 25 funeral merchandise, funeral services, or a 25 26 combination thereof. 25 27 3. The application shall contain: 25 28 a. The name and address of the establishment. 25 29 b. The name and address of any additional provider 25 30 of cemetery merchandise, funeral merchandise, funeral 25 31 services, or a combination thereof. 25 32 c. The name and address of each owner, officer, or 25 33 other official of the establishment, including when 25 34 relevant the chief executive officer and the members 25 35 of the board of directors. 25 36 d. A description of any common business enterprise 25 37 or parent company. 25 38 e. The types of cemetery merchandise, funeral 25 39 merchandise, funeral services, or a combination 25 40 thereof to be sold. 25 41 f. The types of trust or trust alternatives 25 42 utilized by the establishment and a list of the 25 43 financial institutions, storage facilities, surety 25 44 companies, and insurance companies utilized by the 25 45 establishment on a regular basis. 25 46 4. A permit holder shall inform the commissioner 25 47 of changes in the information required to be provided 25 48 by subsection 3 within thirty days of the change. 25 49 5. An establishment permit is not assignable or 25 50 transferable. A permit holder selling all or part of 26 1 an establishment shall cancel the permit and the 26 2 purchaser shall apply for a new permit in the 26 3 purchaser's name within thirty days of the sale. 26 4 6. The commissioner shall grant or deny a permit 26 5 application within thirty days after receipt, but the 26 6 commissioner's failure to act within that time period 26 7 shall not be deemed approval of the application. If 26 8 the commissioner does not grant the permit, the 26 9 commissioner shall notify the person in writing of the 26 10 reasons for the denial. The permit shall disclose on 26 11 its face the permit holder's employer or the 26 12 establishment on whose behalf the applicant will be 26 13 making or attempting to make sales, the permit number, 26 14 and the expiration date. 26 15 7. An initial permit is valid for two years from 26 16 the date the application is filed. A permit may be 26 17 renewed for two years by filing the form prescribed by 26 18 the commissioner under subsection 2, accompanied by a 26 19 ten dollar renewal fee. Submission of purchase 26 20 agreements is not required for renewals unless the 26 21 purchase agreements have been modified since the last 26 22 filing. 26 23 8. The commissioner may by rule create or accept a 26 24 multijurisdiction establishment permit. If the 26 25 establishment permit is issued by another 26 26 jurisdiction, the rules shall require the filing of an 26 27 application or notice form and payment of the 26 28 applicable filing fee of fifty dollars for an initial 26 29 application and ten dollars for a renewal application. 26 30 The application or notice form utilized and the 26 31 effective dates and terms of the permit may vary from 26 32 the provisions set forth in subsections 2, 3, and 7. 26 33 Sec. . NEW SECTION. 523A.502 SALES PERMITS. 26 34 1. A person shall not advertise, sell, promote, or 26 35 offer to furnish cemetery merchandise, funeral 26 36 merchandise, funeral services, or a combination 26 37 thereof when performance or delivery may be more than 26 38 one hundred twenty days following initial payment on 26 39 the account without a sales permit. A permit holder 26 40 must be an employee or agent of a person holding an 26 41 establishment permit who can deliver the cemetery 26 42 merchandise, funeral merchandise, funeral services, or 26 43 a combination thereof being sold. A person must have 26 44 a sales permit for each establishment at which the 26 45 person works. However, a person may apply for a sales 26 46 permit covering multiple establishments, if the 26 47 establishments have common ownership. The 26 48 establishment permit holder is liable for the acts of 26 49 its employees and agents performed in advertising, 26 50 selling, promoting, or offering to furnish, upon the 27 1 future death of a person named or implied in a 27 2 purchase agreement, cemetery merchandise, funeral 27 3 merchandise, funeral services, or a combination 27 4 thereof. 27 5 2. This chapter does not permit a person to 27 6 practice mortuary science without a license. A person 27 7 holding a current sales permit may advertise, sell, 27 8 promote, or offer to furnish a funeral director's 27 9 services as an employee or agent of a funeral 27 10 establishment furnishing the funeral services under 27 11 chapter 156. 27 12 3. An application for a sales permit shall be 27 13 filed on a form prescribed by the commissioner and be 27 14 accompanied by a five dollar filing fee. 27 15 4. The application shall contain: 27 16 a. The name and address of the person. 27 17 b. The name and address of the person's employer 27 18 and each establishment on whose behalf the person will 27 19 be advertising, selling, promoting, or offering to 27 20 furnish cemetery merchandise, funeral merchandise, 27 21 funeral services, or a combination thereof. 27 22 c. The name and address of the provider who will 27 23 provide the cemetery merchandise, funeral merchandise, 27 24 funeral services, or a combination thereof if 27 25 different from the person's employer. 27 26 5. An initial permit expires one year from the 27 27 date the application is filed. The permit may be 27 28 renewed for four years by filing the form prescribed 27 29 by the commissioner under subsection 3, accompanied by 27 30 a twenty dollar filing fee. 27 31 6. A permit holder shall inform the commissioner 27 32 of changes in the information required to be provided 27 33 by subsection 4 within thirty days of the change. 27 34 7. A sales permit is not assignable or 27 35 transferable. A permit holder selling all or part of 27 36 a business shall cancel the permit and the purchaser 27 37 shall apply for a new permit in the purchaser's name 27 38 within thirty days of the sale. 27 39 8. The commissioner shall grant or deny a permit 27 40 application within thirty days after receipt, but the 27 41 commissioner's failure to act within that time period 27 42 shall not be deemed approval of the application. If 27 43 the commissioner does not grant the permit, the 27 44 commissioner shall notify the applicant in writing of 27 45 the reasons for the denial. 27 46 9. The commissioner may by rule create or accept a 27 47 multijurisdiction sales permit. If the sales permit 27 48 is issued by another jurisdiction, the rules shall 27 49 require the filing of an application or notice form 27 50 and payment of the applicable filing fee of five 28 1 dollars for each year. The application or notice form 28 2 utilized and the effective dates and terms of the 28 3 permit may vary from the provisions set forth in 28 4 subsections 3 and 5. 28 5 Sec. . NEW SECTION. 523A.503 DENIAL, 28 6 SUSPENSION, REVOCATION, AND SURRENDER OF PERMITS. 28 7 1. The commissioner may, pursuant to chapter 17A, 28 8 deny any permit application or immediately suspend or 28 9 revoke any permit issued under this chapter for 28 10 several reasons, including but not limited to: 28 11 a. Committing a fraudulent act, engaging in a 28 12 fraudulent practice, or violating any provision of 28 13 this chapter or, any implementing rule or order issued 28 14 under this chapter. 28 15 b. Violating any other state or federal law 28 16 applicable to the conduct of the applicant's or permit 28 17 holder's business. 28 18 c. Insolvency or financial condition. 28 19 d. The permit holder, for the purpose of avoiding 28 20 the trust requirement for funeral services, attributes 28 21 amounts paid under the purchase agreement to cemetery 28 22 merchandise or funeral merchandise that is delivered 28 23 under section 523A.404 rather than to funeral services 28 24 sold to the purchaser. The sale of funeral services 28 25 at a lower price when the sale is made in conjunction 28 26 with the sale of cemetery merchandise or funeral 28 27 merchandise to be delivered under section 523A.404 28 28 than the services are regularly and customarily sold 28 29 for when not sold in conjunction with cemetery 28 30 merchandise or funeral merchandise is evidence that 28 31 the permit holder is acting with the purpose of 28 32 avoiding the trust requirement for funeral services 28 33 under section 523A.201. 28 34 e. Engaging in a deceptive act or practice or 28 35 deliberately misrepresenting or omitting a material 28 36 fact regarding the sale of cemetery merchandise, 28 37 funeral merchandise, funeral services, or a 28 38 combination thereof under this chapter. 28 39 f. Conviction of a criminal offense involving 28 40 dishonesty or a false statement. 28 41 g. Inability to provide the cemetery merchandise, 28 42 funeral merchandise, funeral services, or a 28 43 combination thereof which the applicant or permit 28 44 holder purports to sell. 28 45 h. The applicant or permit holder sells the 28 46 business without filing a prior notice of sale with 28 47 the commissioner. The permit shall be revoked thirty 28 48 days following such sale. 28 49 i. Selling by a person who is not an employee or 28 50 agent of the applicant or permit holder. 29 1 2. The commissioner may, for good cause shown, 29 2 suspend any permit for a period not exceeding thirty 29 3 days, pending investigation. 29 4 3. Except as provided in subsection 2, a permit 29 5 shall not be revoked or suspended except after notice 29 6 and hearing under chapter 17A. 29 7 4. Any permit holder may surrender a permit by 29 8 delivering to the commissioner written notice that the 29 9 permit holder surrenders the permit, but the surrender 29 10 shall not affect the permit holder's civil or criminal 29 11 liability for acts committed before the surrender. 29 12 5. Denial, revocation, suspension, or surrender of 29 13 a permit does not impair or affect the obligation of 29 14 any preexisting lawful agreement between the permit 29 15 holder and any person. 29 16 SUBCHAPTER 6 29 17 PURCHASE AGREEMENT REQUIREMENTS 29 18 Sec. . NEW SECTION. 523A.601 DISCLOSURES. 29 19 1. A purchase agreement for cemetery merchandise, 29 20 funeral merchandise, funeral services, or a 29 21 combination thereof shall be written in clear, 29 22 understandable language, and shall be printed or typed 29 23 in an easy-to-read font, size, and style, and shall: 29 24 a. Identify the seller, the salesperson's permit 29 25 and establishment name and permit number, the 29 26 expiration date of the salesperson's permit, the 29 27 purchaser, and the person for whom the cemetery 29 28 merchandise, funeral merchandise, funeral services, or 29 29 a combination thereof is purchased, if other than the 29 30 purchaser. 29 31 b. Specify the cemetery merchandise, funeral 29 32 merchandise, funeral services, or a combination 29 33 thereof, to be provided, and the cost of each 29 34 merchandise item or service. 29 35 c. State clearly the conditions upon which 29 36 substitution will be allowed. 29 37 d. State the total purchase price and the terms 29 38 under which it is to be paid. 29 39 e. State clearly whether the purchase agreement is 29 40 a guaranteed price agreement or a nonguaranteed price 29 41 agreement. A nonguaranteed price agreement shall 29 42 contain in twelve point bold-faced type an explanation 29 43 of the consequences of such agreement in substantially 29 44 the following language: 29 45 THE PRICES OF MERCHANDISE AND SERVICES UNDER THIS 29 46 AGREEMENT ARE SUBJECT TO CHANGE IN THE FUTURE. ANY 29 47 FUNDS PAID UNDER THIS AGREEMENT ARE ONLY A DEPOSIT TO 29 48 BE APPLIED, TOGETHER WITH ACCRUED INCOME, TOWARD THE 29 49 FINAL COSTS OF THE MERCHANDISE OR SERVICES AGREED 29 50 UPON. ADDITIONAL CHARGES MAY BE INCURRED WHEN 30 1 ADDITIONAL MERCHANDISE OR SERVICES OR BOTH ARE 30 2 PROVIDED OR WHEN PRICES HAVE INCREASED MORE THAN 30 3 ACCRUED INCOME. 30 4 f. State that the purchase of the cemetery 30 5 merchandise, funeral merchandise, and funeral services 30 6 is revocable and specify the damages for cancellation, 30 7 if any. 30 8 g. State clearly who has the authority to cancel, 30 9 amend, or revoke the purchase agreement to purchase 30 10 cemetery merchandise, funeral merchandise, and funeral 30 11 services. 30 12 h. State clearly that the purchaser is entitled to 30 13 rescind the purchase agreement under terms and 30 14 conditions specified by section 523A.602. 30 15 i. Include an explanation of regulatory oversight 30 16 by the insurance division in twelve point bold-faced 30 17 type, in substantially the following language: 30 18 THIS AGREEMENT IS SUBJECT TO RULES ADMINISTERED BY 30 19 THE IOWA INSURANCE DIVISION. YOU MAY CALL THE 30 20 INSURANCE DIVISION AT (___) ________. WRITTEN 30 21 INQUIRIES OR COMPLAINTS SHOULD BE MAILED TO THE IOWA 30 22 SECURITIES BUREAU, (STREET ADDRESS), (CITY), IOWA (ZIP 30 23 CODE). 30 24 2. A purchase agreement that is funded by a trust 30 25 shall also: 30 26 a. State the percentage of money to be placed in 30 27 trust. 30 28 b. Explain the disposition of the income generated 30 29 from investments and include a statement of the 30 30 purchaser's responsibility for income taxes owed on 30 31 the income if applicable. 30 32 c. State that if, after all payments are made 30 33 under the conditions and terms of the purchase 30 34 agreement for cemetery merchandise, funeral 30 35 merchandise, funeral services, or a combination 30 36 thereof, any funds remain in the nonguaranteed 30 37 irrevocable burial trust fund, the seller shall 30 38 disburse the remaining funds according to law. 30 39 d. State clearly the terms of the funeral and 30 40 burial trust agreement and whether it is revocable or 30 41 irrevocable. 30 42 e. State clearly that the purchaser is entitled to 30 43 transfer the trust funding, insurance funding, or 30 44 other trust assets or select another establishment to 30 45 receive the trust funding, insurance funding, or any 30 46 other trust assets. 30 47 f. State clearly who has the authority to amend or 30 48 revoke the trust agreement, if revocable, and who has 30 49 the authority to appoint successor trustees if the 30 50 purchase agreement is canceled. 31 1 3. The commissioner may adopt rules establishing 31 2 disclosure and format requirements to promote consumer 31 3 understanding of the merchandise and services 31 4 purchased and the available funding mechanisms for a 31 5 purchase agreement under this chapter. 31 6 4. A purchase agreement shall be signed by the 31 7 purchaser, the seller, and if the agreement is for 31 8 funeral services as defined in chapter 156, a person 31 9 licensed to deliver funeral services. 31 10 5. The seller shall disclose the following 31 11 information prior to accepting the initial payment 31 12 under a purchase agreement: 31 13 a. The specific method or methods (trust deposits, 31 14 certificates of deposit, life insurance or an annuity, 31 15 a surety bond, or warehousing) that will be used to 31 16 fund the purchase agreement. 31 17 b. The relationship between the soliciting agent 31 18 or agents, the provider of the cemetery merchandise, 31 19 funeral merchandise, or funeral services, or 31 20 combination thereof, the commissioner, and any other 31 21 person. 31 22 c. The relationship of the life insurance policy 31 23 or other trust assets to the funding of the purchase 31 24 agreement and the nature and existence of any 31 25 guarantees regarding the purchase agreement. 31 26 d. The impact on the purchase agreement of the 31 27 following: 31 28 (1) Changes in the funding, including but not 31 29 limited to changes in the assignment, beneficiary 31 30 designation, trustee, or use of proceeds. 31 31 (2) Any penalties to be incurred by the purchaser 31 32 as a result of the failure to make any additional 31 33 payments required. 31 34 (3) Penalties to be incurred upon cancellation. 31 35 e. A list of cemetery merchandise, funeral 31 36 merchandise, and funeral services which are agreed 31 37 upon under the purchase agreement and all relevant 31 38 information concerning the price of the cemetery 31 39 merchandise, funeral merchandise, funeral services, or 31 40 a combination thereof, including a statement that the 31 41 purchase price is either guaranteed at the time of 31 42 purchase or to be determined at the time of need. 31 43 f. All relevant information concerning what occurs 31 44 and whether any entitlements or obligations arise if 31 45 there is a difference between the funding and the 31 46 amount actually needed to fund the purchase agreement. 31 47 g. Any penalties or restrictions including but not 31 48 limited to geographic restrictions or the inability of 31 49 the provider to perform, upon delivery of cemetery 31 50 merchandise, funeral merchandise, or funeral services, 32 1 or the purchase agreement guarantee. 32 2 h. If the funding is being transferred from 32 3 another establishment, any material facts related to 32 4 the revocation of the prior purchase agreement and the 32 5 transfer of the existing trust funds. 32 6 Sec. . NEW SECTION. 523A.602 CONSUMER 32 7 RECISION, CANCELLATION, AND REFUND RIGHTS, AND 32 8 PURCHASE AGREEMENT COMPLIANCE WITH OTHER LAWS. 32 9 1. A seller shall furnish the purchaser with a 32 10 completed copy of a purchase agreement pertaining to 32 11 the sale at the time the purchase agreement is signed. 32 12 The seller shall comply with the following terms: 32 13 a. The same language shall be used in both the 32 14 oral sales representation and the written purchase 32 15 agreement. 32 16 b. The seller shall give notice in the purchase 32 17 agreement of the purchaser's right to rescind after 32 18 signing the purchase agreement. The recision period 32 19 must be but may be greater than three business days 32 20 after the date of the purchase agreement. The notice 32 21 must: 32 22 (1) Be located close to the signature line. 32 23 (2) Be printed in twelve point bold-faced type. 32 24 (3) State that "YOU, THE PURCHASER, HAVE THE RIGHT 32 25 TO RESCIND THIS AGREEMENT AT ANY TIME PRIOR TO 32 26 MIDNIGHT OF THE (INSERT RELEVANT NUMBER, NOT LESS THAN 32 27 THREE) BUSINESS DAYS AFTER THE DATE OF THIS 32 28 AGREEMENT." 32 29 c. All moneys shall be refunded without penalty 32 30 within ten days after recision. 32 31 2. CANCELLATION REFUND. 32 32 a. A purchase agreement must include a statement 32 33 that the purchaser has the right to cancel the 32 34 agreement for the purchase of cemetery merchandise, 32 35 funeral merchandise, and funeral services upon written 32 36 demand and designate or appoint a trustee to hold, 32 37 manage, invest, and distribute the trust assets. 32 38 b. If a purchase agreement is canceled, a 32 39 purchaser requests a transfer of the trust assets upon 32 40 cancellation of a purchase agreement, or another 32 41 establishment provides merchandise or services 32 42 designated in a purchase agreement, the seller shall 32 43 refund or transfer within thirty days of receiving a 32 44 written demand no less than the purchase price of the 32 45 applicable cemetery merchandise, funeral merchandise, 32 46 and funeral services adjusted for inflation, using the 32 47 consumer price index amounts announced by the 32 48 commissioner annually, less any cancellation penalty 32 49 set forth in the purchase agreement. The amount of 32 50 the cancellation penalty shall not exceed ten percent 33 1 of the purchase price of the applicable cemetery 33 2 merchandise, funeral merchandise, and funeral 33 3 services. The seller may also deduct the value of the 33 4 cemetery merchandise, funeral merchandise, and funeral 33 5 services already received by, delivered to, or 33 6 warehoused for the purchaser. 33 7 c. A purchase agreement must include a statement 33 8 that the purchaser is entitled to a refund of the 33 9 purchase price of the applicable funeral merchandise 33 10 adjusted for inflation, using the consumer price index 33 11 amounts announced by the commissioner annually for any 33 12 item of funeral merchandise that cannot be delivered 33 13 to the location specified in the purchase agreement 33 14 within forty-eight hours of notice of the individual's 33 15 death, unless the delay is caused by weather 33 16 conditions or a natural disaster. The seller must 33 17 return such refund to the purchaser within thirty days 33 18 of receiving the written demand. 33 19 3. This section does not prohibit a purchaser who 33 20 is or may become eligible for benefits under Title XIX 33 21 of the federal Social Security Act from making a 33 22 guaranteed price purchase agreement irrevocable to the 33 23 extent that federal law or regulations require that 33 24 such an agreement be irrevocable for purposes of a 33 25 purchaser's eligibility for benefits under Title XIX 33 26 of the federal Social Security Act, as permitted under 33 27 federal law. The seller of credit sale agreements 33 28 shall comply with the requirements of chapter 537, the 33 29 Iowa consumer credit code, and is subject to the 33 30 remedies and penalties provided in that chapter for 33 31 noncompliance. 33 32 SUBCHAPTER 7 33 33 FRAUDULENT PRACTICES 33 34 Sec. . NEW SECTION. 523A.701 MISLEADING 33 35 FILINGS. 33 36 It is unlawful for a person to make or cause to be 33 37 made, in any document filed with the commissioner, or 33 38 in any proceeding under this chapter, any statement of 33 39 material fact which is, at the time and in the light 33 40 of the circumstances under which it is made, false or 33 41 misleading, or, in connection with such statement, to 33 42 omit to state a material fact necessary in order to 33 43 make the statements made, in the light of the 33 44 circumstances under which they are made, not 33 45 misleading. 33 46 Sec. . NEW SECTION. 523A.702 33 47 MISREPRESENTATIONS OF GOVERNMENT APPROVAL. 33 48 It is unlawful for a seller under this chapter to 33 49 represent or imply in any manner that the seller has 33 50 been sponsored, recommended, or approved, or that the 34 1 seller's abilities or qualifications have in any 34 2 respect been passed upon by the commissioner. 34 3 Sec. . NEW SECTION. 523A.703 FRAUDULENT 34 4 PRACTICES. 34 5 A person who commits any of the following acts 34 6 commits a fraudulent practice and is punishable as 34 7 provided in chapter 714: 34 8 1. Knowingly fails to comply with any requirement 34 9 of this chapter. 34 10 2. Knowingly makes, causes to be made, or 34 11 subscribes to a false statement or representation in a 34 12 report or other document required under this chapter, 34 13 implementing rules, or orders, or renders such a 34 14 report or document misleading through the deliberate 34 15 omission of information properly belonging in the 34 16 report or document. 34 17 3. Conspires to defraud in connection with the 34 18 sale of cemetery merchandise, funeral merchandise, 34 19 funeral services, or a combination thereof under this 34 20 chapter. 34 21 4. Fails to deposit funds under sections 523A.201 34 22 and 523A.202 or withdraws any funds in a manner 34 23 inconsistent with this chapter. 34 24 5. Knowingly sells or offers cemetery merchandise, 34 25 funeral merchandise, funeral services, or a 34 26 combination thereof without an establishment permit. 34 27 6. Deliberately misrepresents or omits a material 34 28 fact relative to the sale of cemetery merchandise, 34 29 funeral merchandise, funeral services, or a 34 30 combination thereof under this chapter. When selling 34 31 cemetery merchandise or funeral merchandise, a seller 34 32 shall not exclude the funeral services necessary for 34 33 the delivery, use, or installation of the cemetery 34 34 merchandise or funeral merchandise at the time of the 34 35 funeral or burial unless the purchase agreement 34 36 expressly provides otherwise. 34 37 SUBCHAPTER 8 34 38 ADMINISTRATION AND ENFORCEMENT 34 39 Sec. . NEW SECTION. 523A.801 ADMINISTRATION. 34 40 1. This chapter shall be administered by the 34 41 commissioner. The deputy administrator appointed 34 42 pursuant to section 502.601 shall be the principal 34 43 operations officer responsible to the commissioner for 34 44 the routine administration of this chapter and 34 45 management of the administrative staff. In the 34 46 absence of the commissioner, whether because of 34 47 vacancy in the office due to absence, physical 34 48 disability, or other cause, the deputy administrator 34 49 shall, for the time being, have and exercise the 34 50 authority conferred upon the commissioner. The 35 1 commissioner may by order from time to time delegate 35 2 to the deputy administrator any or all of the 35 3 functions assigned to the commissioner in this 35 4 chapter. The deputy administrator shall employ 35 5 officers, attorneys, accountants, and other employees 35 6 as needed for administering this chapter. 35 7 2. It is unlawful for the commissioner or any 35 8 administrative staff to use for personal benefit any 35 9 information which is filed with or obtained by the 35 10 commissioner and which is not made public. This 35 11 chapter does not authorize the commissioner or any 35 12 such staff member to disclose any such information 35 13 except among themselves or to other cemetery and 35 14 funeral administrators, regulatory authorities, or 35 15 governmental agencies, or when necessary and 35 16 appropriate in a proceeding or investigation under 35 17 this chapter or as required by chapter 22. This 35 18 chapter neither creates nor derogates any privileges 35 19 that exist at common law or otherwise when documentary 35 20 or other evidence is sought under a subpoena directed 35 21 to the commissioner or any administrative staff. 35 22 Sec. . NEW SECTION. 523A.802 SCOPE. 35 23 1. This chapter applies to any advertisement, 35 24 sale, promotion, or offer made by a person to furnish, 35 25 upon the future death of a person named or implied in 35 26 a purchase agreement, cemetery merchandise, funeral 35 27 merchandise, funeral services, or a combination 35 28 thereof. Burial accounts and insurance policies are 35 29 included if the account records or related documents 35 30 identify the establishment that will provide the 35 31 cemetery merchandise, funeral merchandise, funeral 35 32 services, or a combination thereof. 35 33 2. This chapter applies when a purchase agreement 35 34 is executed within this state or an advertisement, 35 35 promotion, or offer to furnish is made or accepted 35 36 within this state. An offer to furnish is made within 35 37 this state, whether or not either party is then 35 38 present in this state, when the offer originates from 35 39 this state or is directed by the offeror to this state 35 40 and received by the offeree in this state through the 35 41 mail, over the telephone, by the internet, or through 35 42 any other means of commerce. 35 43 3. If a foreign person does not have a registered 35 44 agent or agents in the state of Iowa, doing business 35 45 within this state shall constitute the person's 35 46 appointment of the secretary of state of the state of 35 47 Iowa to be its true and lawful attorney upon whom may 35 48 be served all lawful process of original notice in 35 49 actions or proceedings arising or growing out of any 35 50 contract or tort. 36 1 Sec. . NEW SECTION. 523A.803 INVESTIGATIONS 36 2 AND SUBPOENAS. 36 3 1. The commissioner may, for the purpose of 36 4 discovering violations of this chapter, implementing 36 5 rules, or orders issued under this chapter: 36 6 a. Make such public or private investigations 36 7 within or outside of this state as the commissioner 36 8 deems necessary to determine whether any person has 36 9 violated or is about to violate this chapter, 36 10 implementing rules, or orders issued under this 36 11 chapter, or to aid in enforcement of this chapter or 36 12 in the prescribing of rules and forms under this 36 13 chapter. 36 14 b. Require or permit any person to file a 36 15 statement in writing, under oath or otherwise as the 36 16 commissioner or attorney general determines, as to all 36 17 the facts and circumstances concerning the matter to 36 18 be investigated. 36 19 c. Notwithstanding chapter 22, keep confidential 36 20 the information obtained in the course of an 36 21 investigation. However, if the commissioner 36 22 determines that it is necessary or appropriate in the 36 23 public interest or for the protection of the public, 36 24 the commissioner may share information with other 36 25 administrators, regulatory authorities, or 36 26 governmental agencies, or may publish information 36 27 concerning a violation of this chapter, implementing 36 28 rules, or orders issued under this chapter. 36 29 d. Investigate the establishment and examine the 36 30 books, accounts, papers, correspondence, memoranda, 36 31 purchase agreements, files, or other documents or 36 32 records used by every applicant and permit holder 36 33 under this chapter. 36 34 e. Administer oaths and affirmations, subpoena 36 35 witnesses, compel their attendance, take evidence, and 36 36 require the production of any books, accounts, papers, 36 37 correspondence, memoranda, purchase agreements, files, 36 38 or other documents or records which the commissioner 36 39 deems relevant or material to any investigation or 36 40 proceeding under this chapter and implementing rules, 36 41 all of which may be enforced under chapter 17A. 36 42 f. Apply to the district court for an order 36 43 requiring a person's appearance before the 36 44 commissioner or attorney general, or a designee of 36 45 either or both, in cases where the person has refused 36 46 to obey a subpoena issued by the commissioner or 36 47 attorney general. The person may also be required to 36 48 produce documentary evidence germane to the subject of 36 49 the investigation. Failure to obey a court order 36 50 under this subsection constitutes contempt of court. 37 1 2. The commissioner may issue and bring an action 37 2 in district court to enforce subpoenas within this 37 3 state at the request of an agency or administrator of 37 4 another state, if the activity constituting an alleged 37 5 violation for which the information is sought would be 37 6 a violation of this chapter had the activity occurred 37 7 in this state. 37 8 Sec. . NEW SECTION. 523A.804 MEDIATION. 37 9 The commissioner may order an establishment to 37 10 participate in mediation in any dispute regarding a 37 11 purchase agreement. Mediation performed under this 37 12 section shall be conducted by a mediator appointed by 37 13 the commissioner and shall comply with the provisions 37 14 of chapter 679C. 37 15 Mediation of these disputes shall include 37 16 attendance at a mediation session with the mediator 37 17 and the parties to the dispute, listening to the 37 18 mediator's explanation of the mediation process, 37 19 presentation of one party's view of the dispute, and 37 20 listening to the response of the other party. 37 21 Participation in mediation does not require that the 37 22 parties reach a mediation agreement. 37 23 Parties to the mediation shall have the right to 37 24 advice and presence of counsel at all times. The 37 25 parties to the mediation shall present any mediation 37 26 agreement reached through the mediation to the 37 27 commissioner. If a mediation agreement is not 37 28 reached, the mediator shall file a report with the 37 29 commissioner. The costs of the mediation shall be 37 30 approved by the commissioner and shall be borne by the 37 31 insurance division's regulatory fund. 37 32 Sec. . NEW SECTION. 523A.805 CEASE AND DESIST 37 33 ORDERS – INJUNCTIONS. 37 34 If it appears to the commissioner that a person has 37 35 engaged or is about to engage in an act or practice 37 36 constituting a violation of this chapter, implementing 37 37 rules, or orders issued under this chapter, the 37 38 commissioner or the attorney general may do either or 37 39 both of the following: 37 40 1. Issue a summary order directed at the person 37 41 requiring the person to cease and desist from engaging 37 42 in such act or practice. A person may request a 37 43 hearing within thirty days of issuance of the summary 37 44 order. If a hearing is not timely requested, the 37 45 summary order shall become final by operation of law. 37 46 The order shall remain effective from the date of 37 47 issuance until the date the order becomes final by 37 48 operation of law or is overturned by a presiding 37 49 officer following a request for hearing. Section 37 50 17A.18A is inapplicable to summary cease and desist 38 1 orders issued under this section. 38 2 2. Bring an action in the district court in any 38 3 county of the state for an injunction to restrain a 38 4 person subject to this chapter and any agents, 38 5 employees, or associates of the person from engaging 38 6 in conduct or practices deemed contrary to the public 38 7 interest. In any proceeding for an injunction, the 38 8 commissioner or attorney general may apply to the 38 9 court for a subpoena to require the appearance of a 38 10 defendant and the defendant's agents and for any 38 11 books, accounts, papers, correspondence, memoranda, 38 12 purchase agreements, files, or other documents or 38 13 records germane to the hearing upon the petition for 38 14 an injunction. Upon a proper showing, a permanent or 38 15 temporary injunction, restraining order, or writ of 38 16 mandamus shall be granted and a receiver may be 38 17 appointed for the defendant or the defendant's assets. 38 18 The commissioner or attorney general shall not be 38 19 required to post a bond. 38 20 Sec. . NEW SECTION. 523A.806 COURT ACTION FOR 38 21 FAILURE TO COOPERATE. 38 22 If a person fails or refuses to file any statement 38 23 or report or to produce any books, accounts, papers, 38 24 correspondence, memoranda, purchase agreements, files, 38 25 or other documents or records, or to obey any subpoena 38 26 issued by the commissioner, the commissioner may refer 38 27 the matter to the attorney general, who may apply to a 38 28 district court to enforce compliance. The court may 38 29 order any or all of the following: 38 30 1. Injunctive relief, restricting or prohibiting 38 31 the offer or sale of cemetery merchandise, funeral 38 32 merchandise, funeral services, or a combination 38 33 thereof. 38 34 2. Revocation or suspension of any permit issued 38 35 under this chapter. 38 36 3. Production of documents or records including 38 37 but not limited to books, accounts, papers, 38 38 correspondence, memoranda, purchase agreements, files, 38 39 or other documents or records. 38 40 4. Such other relief as may be required. 38 41 Such an order shall be effective until the person 38 42 files the statement or report or produces the 38 43 documents requested, or obeys the subpoena. 38 44 Sec. . NEW SECTION. 523A.807 PROSECUTION FOR 38 45 VIOLATIONS OF LAW. 38 46 1. A violation of this chapter or rules adopted or 38 47 orders issued under this chapter is a violation of 38 48 section 714.16, subsection 2, paragraph "a". The 38 49 remedies and penalties provided by section 714.16, 38 50 including but not limited to injunctive relief and 39 1 penalties, apply to violations of this chapter. 39 2 2. If the commissioner believes that grounds exist 39 3 for the criminal prosecution of persons subject to 39 4 this chapter for violations of this chapter or any 39 5 other law of this state, the commissioner may forward 39 6 to the attorney general or the county attorney the 39 7 grounds for the belief, including all evidence in the 39 8 commissioner's possession, so that the attorney 39 9 general or the county attorney may proceed with the 39 10 matter as deemed appropriate. 39 11 Sec. . NEW SECTION. 523A.808 COOPERATION WITH 39 12 OTHER AGENCIES. 39 13 1. To encourage uniform interpretation and 39 14 administration of this chapter and effective 39 15 regulation of the sale of cemetery merchandise, 39 16 funeral merchandise, and funeral services, the 39 17 commissioner may cooperate with any governmental law 39 18 enforcement or regulatory agency. 39 19 2. This cooperation includes but is not limited 39 20 to: 39 21 a. Making a joint examination or investigation. 39 22 b. Holding a joint administrative hearing. 39 23 c. Filing and prosecuting a joint civil or 39 24 administrative proceeding. 39 25 d. Sharing and exchanging personnel. 39 26 e. Sharing and exchanging relevant information and 39 27 documents. 39 28 f. Formulating, in accordance with chapter 17A, 39 29 rules or proposed rules on matters such as statements 39 30 of policy, regulatory standards, guidelines, and 39 31 interpretive opinions. 39 32 Sec. . NEW SECTION. 523A.809 RULES, FORMS, 39 33 AND ORDERS. 39 34 1. Under chapter 17A, the commissioner may from 39 35 time to time make, amend, and rescind such rules, 39 36 forms, and orders as are necessary or appropriate for 39 37 the protection of purchasers and the public and to 39 38 administer the provisions of this chapter, its 39 39 implementing rules, and orders issued under this 39 40 chapter. 39 41 2. A rule, form, or order shall not be made, 39 42 amended, or rescinded unless the commissioner finds 39 43 that the action is necessary or appropriate in the 39 44 public interest or for the protection of purchasers 39 45 and consistent with the purposes fairly intended by 39 46 the policies and provisions of this chapter, its 39 47 implementing rules, and orders issued under this 39 48 chapter. 39 49 3. A provision of this chapter imposing any 39 50 liability does not apply to any act done or omitted in 40 1 good faith in conformity with any rules, form, or 40 2 order of the commissioner, notwithstanding that the 40 3 rule, form, or order may later be amended or rescinded 40 4 or be determined by judicial or other authority to be 40 5 invalid for any reason. 40 6 Sec. . NEW SECTION. 523A.810 DATE OF FILING 40 7 AND INTERPRETIVE OPINIONS. 40 8 1. A document is filed when it is received by the 40 9 commissioner. 40 10 2. Requests for interpretive opinions may be 40 11 granted in the commissioner's discretion. 40 12 Sec. . NEW SECTION. 523A.811 RECEIVERSHIPS. 40 13 1. The commissioner shall notify the attorney 40 14 general of the potential need for establishment of a 40 15 receivership if the commissioner finds that a seller 40 16 subject to this chapter meets one or more of the 40 17 following conditions: 40 18 a. Is insolvent. 40 19 b. Has utilized trust funds for personal or 40 20 business purposes in a manner inconsistent with this 40 21 chapter. 40 22 c. The amount of funds currently held in trust for 40 23 cemetery merchandise, funeral merchandise, and funeral 40 24 services is less than eighty percent of all payments 40 25 made under the purchase agreements referred to in 40 26 section 523A.201. 40 27 d. Has refused to pay any just claim or demand 40 28 based on a purchase agreement referred to in section 40 29 523A.201. 40 30 e. The commissioner finds upon investigation that 40 31 a seller is unable to pay any claim or demand based on 40 32 a purchase agreement which has been legally determined 40 33 to be just and outstanding. 40 34 2. The commissioner or attorney general may apply 40 35 to the district court in any county of the state for 40 36 the establishment of a receivership. Upon proof of 40 37 any of the grounds for a receivership described in 40 38 this section, the court may grant a receivership. 40 39 Sec. . NEW SECTION. 523A.812 INSURANCE 40 40 DIVISION'S REGULATORY FUND. 40 41 The insurance division may authorize the creation 40 42 of a special revenue fund in the state treasury, to be 40 43 known as the insurance division regulatory fund. The 40 44 commissioner shall allocate annually from the fees 40 45 paid pursuant to section 523A.204, two dollars for 40 46 each purchase agreement reported on an establishment 40 47 permit holder's annual report for deposit to the 40 48 regulatory fund. The remainder of the fees collected 40 49 pursuant to section 523A.204 shall be deposited into 40 50 the general fund of the state. The moneys in the 41 1 regulatory fund shall be retained in the fund. The 41 2 moneys are appropriated and, subject to authorization 41 3 by the commissioner, may be used to pay auditors, 41 4 audit expenses, investigative expenses, the expenses 41 5 of mediation ordered by the commissioner, consumer 41 6 education expenses, the expenses of a toll-free 41 7 telephone line to receive consumer complaints, and the 41 8 expenses of receiverships established under section 41 9 523A.811. An annual allocation to the regulatory fund 41 10 shall not be imposed if the current balance of the 41 11 fund exceeds two hundred thousand dollars. 41 12 Sec. . NEW SECTION. 523A.813 LICENSE 41 13 REVOCATION – RECOMMENDATION BY COMMISSIONER TO BOARD 41 14 OF MORTUARY SCIENCE EXAMINERS. 41 15 Upon a determination by the commissioner that 41 16 grounds exist for an administrative license revocation 41 17 or suspension action by the board of mortuary science 41 18 examiners under chapter 156, the commissioner may 41 19 forward to the board the grounds for the 41 20 determination, including all evidence in the 41 21 possession of the commissioner, so that the board may 41 22 proceed with the matter as deemed appropriate. 41 23 SUBCHAPTER 9 41 24 LIQUIDATION PROCEDURES 41 25 Sec. . NEW SECTION. 523A.901 LIQUIDATION. 41 26 1. GROUNDS FOR LIQUIDATION. The commissioner may 41 27 petition the district court for an order directing the 41 28 commissioner to liquidate an establishment on either 41 29 of the following grounds: 41 30 a. The establishment did not deposit funds 41 31 pursuant to section 523A.201 or withdrew funds in a 41 32 manner inconsistent with this chapter and is 41 33 insolvent. 41 34 b. The establishment did not deposit funds 41 35 pursuant to section 523A.201 or withdrew funds in a 41 36 manner inconsistent with this chapter and the 41 37 condition of the establishment is such that further 41 38 transaction of business would be hazardous, 41 39 financially or otherwise, to purchasers or the public. 41 40 2. LIQUIDATION ORDER. 41 41 a. An order to liquidate the business of an 41 42 establishment shall appoint the commissioner as 41 43 liquidator and shall direct the liquidator to 41 44 immediately take possession of the assets of the 41 45 establishment and to administer them under the general 41 46 supervision of the court. The liquidator is vested 41 47 with the title to the property, contracts, and rights 41 48 of action and the books and records of the 41 49 establishment ordered liquidated, wherever located, as 41 50 of the entry of the final order of liquidation. The 42 1 filing or recording of the order with the clerk of 42 2 court and the recorder of deeds of the county in which 42 3 its principal office or place of business is located, 42 4 or, in the case of real estate with the recorder of 42 5 deeds of the county where the property is located, is 42 6 notice as a deed, bill of sale, or other evidence of 42 7 title duly filed or recorded with the recorder of 42 8 deeds. 42 9 b. Upon issuance of an order, the rights and 42 10 liabilities of an establishment and of the 42 11 establishment's creditors, purchasers, owners, and 42 12 other persons interested in the establishment's estate 42 13 shall become fixed as of the date of the entry of the 42 14 order of liquidation, except as provided in subsection 42 15 14. 42 16 c. At the time of petitioning for an order of 42 17 liquidation, or at any time after the time of 42 18 petitioning, the commissioner, after making 42 19 appropriate findings of an establishment's insolvency, 42 20 may petition the court for a declaration of 42 21 insolvency. After providing notice and hearing as it 42 22 deems proper, the court may make the declaration. 42 23 d. An order issued under this section shall 42 24 require accounting to the court by the liquidator. 42 25 Accountings, at a minimum, must include all funds 42 26 received or disbursed by the liquidator during the 42 27 current period. An accounting shall be filed within 42 28 one year of the liquidation order and at such other 42 29 times as the court may require. 42 30 e. Within five days after the initiation of an 42 31 appeal of an order of liquidation, which order has not 42 32 been stayed, the commissioner shall present for the 42 33 court's approval a plan for the continued performance 42 34 of the establishment's obligations during the pendency 42 35 of an appeal. The plan shall provide for the 42 36 continued performance of purchase agreements in the 42 37 normal course of events, notwithstanding the grounds 42 38 alleged in support of the order of liquidation 42 39 including the ground of insolvency. If the defendant 42 40 establishment's financial condition, in the judgment 42 41 of the commissioner, will not support the full 42 42 performance of all obligations during the appeal 42 43 pendency period, the plan may prefer the claims of 42 44 certain purchasers and claimants over creditors and 42 45 interested parties as well as other purchasers and 42 46 claimants, as the commissioner finds to be fair and 42 47 equitable considering the relative circumstances of 42 48 such purchasers and claimants. The court shall 42 49 examine the plan submitted by the commissioner and if 42 50 it finds the plan to be in the best interests of the 43 1 parties, the court shall approve the plan. An action 43 2 shall not lie against the commissioner or any of the 43 3 commissioner's deputies, agents, clerks, assistants, 43 4 or attorneys by any party based on preference in an 43 5 appeal pendency plan approved by the court. 43 6 3. POWERS OF LIQUIDATOR. 43 7 a. The liquidator may do any of the following: 43 8 (1) Appoint a special deputy to act for the 43 9 liquidator under this chapter, and determine the 43 10 special deputy's reasonable compensation. The special 43 11 deputy shall have all the powers of the liquidator 43 12 granted by this section. The special deputy shall 43 13 serve at the pleasure of the liquidator. 43 14 (2) Hire employees and agents, legal counsel, 43 15 accountants, appraisers, consultants, and other 43 16 personnel as the commissioner may deem necessary to 43 17 assist in the liquidation. 43 18 (3) With the approval of the court, fix reasonable 43 19 compensation of employees and agents, legal counsel, 43 20 accountants, appraisers, and consultants. 43 21 (4) Pay reasonable compensation to persons 43 22 appointed and defray from the funds or assets of the 43 23 establishment all expenses of taking possession of, 43 24 conserving, conducting, liquidating, disposing of, or 43 25 otherwise dealing with the business and property of 43 26 the establishment. If the property of the 43 27 establishment does not contain sufficient cash or 43 28 liquid assets to defray the costs incurred, the 43 29 commissioner may advance the costs so incurred out of 43 30 the insurance division regulatory fund. Amounts so 43 31 advanced for expenses of administration shall be 43 32 repaid to the insurance division regulatory fund for 43 33 the use of the division out of the first available 43 34 moneys of the establishment. 43 35 (5) Hold hearings, subpoena witnesses, and compel 43 36 their attendance, administer oaths, examine a person 43 37 under oath, and compel a person to subscribe to the 43 38 person's testimony after it has been correctly reduced 43 39 to writing, and in connection to the proceedings 43 40 require the production of books, accounts, papers, 43 41 correspondence, memoranda, purchase agreements, files, 43 42 or other documents or records which the liquidator 43 43 deems relevant to the inquiry. 43 44 (6) Collect debts and moneys due and claims 43 45 belonging to the establishment, wherever located. 43 46 Pursuant to this subparagraph, the liquidator may do 43 47 any of the following: 43 48 (a) Institute timely action in other jurisdictions 43 49 to forestall garnishment and attachment proceedings 43 50 against debts. 44 1 (b) Perform acts as are necessary or expedient to 44 2 collect, conserve, or protect its assets or property, 44 3 including the power to sell, compound, compromise, or 44 4 assign debts for purposes of collection upon terms and 44 5 conditions as the liquidator deems best. 44 6 (c) Pursue any creditor's remedies available to 44 7 enforce claims. 44 8 (7) Conduct public and private sales of the 44 9 property of the establishment. 44 10 (8) Use assets of the establishment under a 44 11 liquidation order to transfer obligations of purchase 44 12 agreements to a solvent establishment, if the transfer 44 13 can be accomplished without prejudice to the 44 14 applicable priorities under subsection 18. 44 15 (9) Acquire, hypothecate, encumber, lease, 44 16 improve, sell, transfer, abandon, or otherwise dispose 44 17 of or deal with property of the establishment at its 44 18 market value or upon terms and conditions as are fair 44 19 and reasonable. The liquidator shall also have power 44 20 to execute, acknowledge, and deliver deeds, 44 21 assignments, releases, and other instruments necessary 44 22 to effectuate a sale of property or other transaction 44 23 in connection with the liquidation. 44 24 (10) Borrow money on the security of the 44 25 establishment's assets or without security and execute 44 26 and deliver documents necessary to that transaction 44 27 for the purpose of facilitating the liquidation. 44 28 Money borrowed pursuant to this subparagraph shall be 44 29 repaid as an administrative expense and shall have 44 30 priority over any other class 1 claims under the 44 31 priority of distribution established in subsection 18. 44 32 (11) Enter into contracts as necessary to carry 44 33 out the order to liquidate and affirm or disavow 44 34 contracts to which the establishment is a party. 44 35 (12) Continue to prosecute and to institute in the 44 36 name of the establishment or in the liquidator's own 44 37 name any and all suits and other legal proceedings, in 44 38 this state or elsewhere, and to abandon the 44 39 prosecution of claims the liquidator deems 44 40 unprofitable to pursue further. 44 41 (13) Prosecute an action on behalf of the 44 42 creditors, purchasers, or owners against an officer of 44 43 the establishment or any other person. 44 44 (14) Remove records and property of the 44 45 establishment to the offices of the commissioner or to 44 46 other places as may be convenient for the purposes of 44 47 efficient and orderly execution of the liquidation. 44 48 (15) Deposit in one or more banks in this state 44 49 sums as are required for meeting current 44 50 administration expenses and distributions. 45 1 (16) Unless the court orders otherwise, invest 45 2 funds not currently needed. 45 3 (17) File necessary documents for recording in the 45 4 office of the recorder of deeds or record office in 45 5 this state or elsewhere where property of the 45 6 establishment is located. 45 7 (18) Assert defenses available to the 45 8 establishment against third persons including statutes 45 9 of limitations, statutes of fraud, and the defense of 45 10 usury. A waiver of a defense by the establishment 45 11 after a petition in liquidation has been filed shall 45 12 not bind the liquidator. 45 13 (19) Exercise and enforce the rights, remedies, 45 14 and powers of a creditor, purchaser, or owner, 45 15 including the power to avoid transfer or lien that may 45 16 be given by the general law and that is not included 45 17 within subsections 7 through 9. 45 18 (20) Intervene in a proceeding wherever instituted 45 19 that might lead to the appointment of a receiver or 45 20 trustee, and act as the receiver or trustee whenever 45 21 the appointment is offered. 45 22 (21) Exercise powers now held or later conferred 45 23 upon receivers by the laws of this state which are not 45 24 inconsistent with this chapter. 45 25 b. This subsection does not limit the liquidator 45 26 or exclude the liquidator from exercising a power not 45 27 listed in paragraph "a" that may be necessary or 45 28 appropriate to accomplish the purposes of this 45 29 chapter. 45 30 4. NOTICE TO CREDITORS AND OTHERS. 45 31 a. Unless the court otherwise directs, the 45 32 liquidator shall give notice of the liquidation order 45 33 as soon as possible by doing both of the following: 45 34 (1) Mailing notice, by first-class mail, to all 45 35 persons known or reasonably expected to have claims 45 36 against the establishment, including purchasers, at 45 37 their last known address as indicated by the records 45 38 of the establishment. 45 39 (2) Publication of notice in a newspaper of 45 40 general circulation in the county in which the 45 41 establishment has its principal place of business and 45 42 in other locations as the liquidator deems 45 43 appropriate. 45 44 b. Notice to potential claimants under paragraph 45 45 "a" shall require claimants to file with the 45 46 liquidator their claims together with proper proofs of 45 47 the claim under subsection 13 on or before a date the 45 48 liquidator shall specify in the notice. Claimants 45 49 shall keep the liquidator informed of their changes of 45 50 address, if any. 46 1 c. If notice is given pursuant to this subsection, 46 2 the distribution of assets of the establishment under 46 3 this chapter shall be conclusive with respect to 46 4 claimants, whether or not a claimant actually received 46 5 notice. 46 6 5. ACTIONS BY AND AGAINST LIQUIDATOR. 46 7 a. After issuance of an order appointing a 46 8 liquidator of an establishment, an action at law or 46 9 equity shall not be brought against the establishment 46 10 within this state or elsewhere, and existing actions 46 11 shall not be maintained or further presented after 46 12 issuance of the order. Whenever in the liquidator's 46 13 judgment, protection of the estate of the 46 14 establishment necessitates intervention in an action 46 15 against the establishment that is pending outside this 46 16 state, the liquidator may intervene in the action. 46 17 The liquidator may defend, at the expense of the 46 18 estate of the establishment, an action in which the 46 19 liquidator intervenes under this section. 46 20 b. Within two years or such additional time as 46 21 applicable law may permit, the liquidator, after the 46 22 issuance of an order for liquidation, may institute an 46 23 action or proceeding on behalf of the estate of the 46 24 establishment upon any cause of action against which 46 25 the period of limitation fixed by applicable law has 46 26 not expired at the time of the filing of the petition 46 27 upon which the order is entered. If a period of 46 28 limitation is fixed by agreement for instituting a 46 29 suit or proceeding upon a claim, or for filing a 46 30 claim, proof of claim, proof of loss, demand, notice, 46 31 or the like, or if in a proceeding, judicial or 46 32 otherwise, a period of limitation is fixed in the 46 33 proceeding or pursuant to applicable law for taking an 46 34 action, filing a claim or pleading, or doing an act, 46 35 and if the period has not expired at the date of the 46 36 filing of the petition, the liquidator may, for the 46 37 benefit of the estate, take any action or do any act, 46 38 required of or permitted to the establishment, within 46 39 a period of one hundred eighty days subsequent to the 46 40 entry of an order for liquidation, or within a further 46 41 period as is shown to the satisfaction of the court 46 42 not to be unfairly prejudicial to the other party. 46 43 c. A statute of limitations or defense of laches 46 44 shall not run with respect to an action against an 46 45 establishment between the filing of a petition for 46 46 liquidation against the establishment and the denial 46 47 of the petition. An action against the establishment 46 48 that might have been commenced when the petition was 46 49 filed may be commenced for at least sixty days after 46 50 the petition is denied. 47 1 6. COLLECTION AND LIST OF ASSETS. 47 2 a. As soon as practicable after the liquidation 47 3 order but not later than one hundred twenty days after 47 4 such order, the liquidator shall prepare in duplicate 47 5 a list of the establishment's assets. The list shall 47 6 be amended or supplemented as the liquidator may 47 7 determine. One copy shall be filed in the office of 47 8 the clerk of court, and one copy shall be retained for 47 9 the liquidator's files. Amendments and supplements 47 10 shall be similarly filed. 47 11 b. The liquidator shall reduce the assets to a 47 12 degree of liquidity that is consistent with the 47 13 effective execution of the liquidation. 47 14 c. A submission of a proposal to the court for 47 15 distribution of assets in accordance with subsection 47 16 11 fulfills the requirements of paragraph "a". 47 17 7. FRAUDULENT TRANSFERS PRIOR TO PETITION. 47 18 a. A transfer made and an obligation incurred by 47 19 an establishment within one year prior to the filing 47 20 of a successful petition for liquidation under this 47 21 chapter is fraudulent as to then existing and future 47 22 creditors if made or incurred without fair 47 23 consideration, or with actual intent to hinder, delay, 47 24 or defraud either existing or future creditors. A 47 25 fraudulent transfer made or an obligation incurred by 47 26 an establishment ordered to be liquidated under this 47 27 chapter may be avoided by the liquidator, except as to 47 28 a person who in good faith is a purchaser, lienor, or 47 29 obligee for a present fair equivalent value. A 47 30 purchaser, lienor, or obligee, who in good faith has 47 31 given a consideration less than present fair 47 32 equivalent value for such transfer, lien, or 47 33 obligation, may retain the property, lien, or 47 34 obligation as security for repayment. The court may, 47 35 on due notice, order any such transfer, lien, or 47 36 obligation to be preserved for the benefit of the 47 37 estate, and in that event, the receiver shall succeed 47 38 to and may enforce the rights of the purchaser, 47 39 lienor, or obligee. 47 40 b. (1) A transfer of property other than real 47 41 property is made when it becomes perfected so that a 47 42 subsequent lien obtainable by legal or equitable 47 43 proceedings on a simple contract could not become 47 44 superior to the rights of the transferee under 47 45 subsection 9, paragraph "c". 47 46 (2) A transfer of real property is made when it 47 47 becomes perfected so that a subsequent bona fide 47 48 purchaser from the establishment could not obtain 47 49 rights superior to the rights of the transferee. 47 50 (3) A transfer which creates an equitable lien is 48 1 not perfected if there are available means by which a 48 2 legal lien could be perfected. 48 3 (4) A transfer not perfected prior to the filing 48 4 of a petition for liquidation is deemed to be made 48 5 immediately before the filing of the successful 48 6 petition. 48 7 (5) This subsection applies whether or not there 48 8 are or were creditors who might have obtained a lien 48 9 or persons who might have become bona fide purchasers. 48 10 8. FRAUDULENT TRANSFER AFTER PETITION. 48 11 a. After a petition for liquidation has been 48 12 filed, a transfer of real property of the 48 13 establishment made to a person acting in good faith is 48 14 valid against the liquidator if made for a present 48 15 fair equivalent value. If the transfer is not made 48 16 for a present fair equivalent value, then the transfer 48 17 is valid to the extent of the present consideration 48 18 actually paid for which amount the transferee shall 48 19 have a lien on the property transferred. The 48 20 commencement of a proceeding in liquidation is 48 21 constructive notice upon the recording of a copy of 48 22 the petition for or order of liquidation with the 48 23 recording or deeds in the county where any real 48 24 property in question is located. The exercise by a 48 25 court of the United States or a state or jurisdiction 48 26 to authorize a judicial sale of real property of the 48 27 establishment within a county in a state shall not be 48 28 impaired by the pendency of a proceeding unless the 48 29 copy is recorded in the county prior to the 48 30 consummation of the judicial sale. 48 31 b. After a petition for liquidation has been filed 48 32 and before either the liquidator takes possession of 48 33 the property of the establishment or an order of 48 34 liquidation is granted: 48 35 (1) A transfer of the property, other than real 48 36 property, of the establishment made to a person acting 48 37 in good faith is valid against the liquidator if made 48 38 for a present fair equivalent value. If the transfer 48 39 was not made for a present fair equivalent value, then 48 40 the transfer is valid to the extent of the present 48 41 consideration actually paid for which amount the 48 42 transferee shall have a lien on the property 48 43 transferred. 48 44 (2) If acting in good faith, a person indebted to 48 45 the establishment or holding property of the 48 46 establishment may pay the debt or deliver the 48 47 property, or any part of the property, to the 48 48 establishment or upon the establishment's order as if 48 49 the petition were not pending. 48 50 (3) A person having actual knowledge of the 49 1 pending liquidation is not acting in good faith. 49 2 (4) A person asserting the validity of a transfer 49 3 under this subsection has the burden of proof. Except 49 4 as provided in this subsection, a transfer by or on 49 5 behalf of the establishment after the date of the 49 6 petition for liquidation by any person other than the 49 7 liquidator is not valid against the liquidator. 49 8 c. A person receiving any property from the 49 9 establishment or any benefit of the property of the 49 10 establishment which is a fraudulent transfer under 49 11 paragraph "a" is personally liable for the property or 49 12 benefit and shall account to the liquidator. 49 13 d. This chapter does not impair the negotiability 49 14 of currency or negotiable instruments. 49 15 9. VOIDABLE PREFERENCES AND LIENS. 49 16 a. (1) A preference is a transfer of the property 49 17 of an establishment to or for the benefit of a 49 18 creditor for an antecedent debt made or suffered by 49 19 the establishment within one year before the filing of 49 20 a successful petition for liquidation under this 49 21 chapter, the effect of which transfer may be to enable 49 22 the creditor to obtain a greater percentage of this 49 23 debt than another creditor of the same class would 49 24 receive. If a liquidation order is entered while the 49 25 establishment is already subject to a receivership, 49 26 then the transfers are preferences if made or suffered 49 27 within one year before the filing of the successful 49 28 petition for the receivership, or within two years 49 29 before the filing of the successful petition for 49 30 liquidation, whichever time is shorter. 49 31 (2) A preference may be avoided by the liquidator 49 32 if any of the following exist: 49 33 (a) The establishment was insolvent at the time of 49 34 the transfer. 49 35 (b) The transfer was made within four months 49 36 before the filing of the petition. 49 37 (c) At the time the transfer was made, the 49 38 creditor receiving it or to be benefited by the 49 39 transfer or the creditor's agent acting with reference 49 40 to the transfer had reasonable cause to believe that 49 41 the establishment was insolvent or was about to become 49 42 insolvent. 49 43 (d) The creditor receiving the transfer was an 49 44 officer, or an employee, attorney, or other person who 49 45 was in fact in a position of comparable influence in 49 46 the establishment to an officer whether or not the 49 47 person held the position of an officer, owner, or 49 48 other person, firm, corporation, association, or 49 49 aggregation of persons with whom the establishment did 49 50 not deal at arm's length. 50 1 (3) Where the preference is voidable, the 50 2 liquidator may recover the property. If the property 50 3 has been converted, the liquidator may recover its 50 4 value from a person who has received or converted the 50 5 property. However, if a bona fide purchaser or lienor 50 6 has given less than the present fair equivalent value, 50 7 the purchaser or lienor shall have a lien upon the 50 8 property to the extent of the consideration actually 50 9 given. Where a preference by way of lien or security 50 10 interest is voidable, the court may on due notice 50 11 order the lien or security interest to be preserved 50 12 for the benefit of the estate, in which event the lien 50 13 or title shall pass to the liquidator. 50 14 b. (1) A transfer of property other than real 50 15 property is made when it becomes perfected so that a 50 16 subsequent lien obtainable by legal or equitable 50 17 proceedings on a simple contract could not become 50 18 superior to the rights of the transferee. 50 19 (2) A transfer of real property is made when it 50 20 becomes perfected so that a subsequent bona fide 50 21 purchaser from the establishment could not obtain 50 22 rights superior to the rights of the transferee. 50 23 (3) A transfer which creates an equitable lien is 50 24 not perfected if there are available means by which a 50 25 legal lien could be created. 50 26 (4) A transfer not perfected prior to the filing 50 27 of a petition for liquidation is deemed to be made 50 28 immediately before the filing of the successful 50 29 petition. 50 30 (5) This subsection applies whether or not there 50 31 are or were creditors who might have obtained liens or 50 32 persons who might have become bona fide purchasers. 50 33 c. (1) A lien obtainable by legal or equitable 50 34 proceedings upon a simple contract is one arising in 50 35 the ordinary course of the proceedings upon the entry 50 36 or docketing of a judgment or decree, or upon 50 37 attachment, garnishment, execution, or like process, 50 38 whether before, upon, or after judgment or decree and 50 39 whether before or upon levy. It does not include 50 40 liens which under applicable law are given a special 50 41 priority over other liens which are prior in time. 50 42 (2) A lien obtainable by legal or equitable 50 43 proceedings may become superior to the rights of a 50 44 transferee, or a purchaser may obtain rights superior 50 45 to the rights of a transferee within the meaning of 50 46 paragraph "b", if such consequences follow only from 50 47 the lien or purchase itself, or from the lien or 50 48 purchase followed by a step wholly within the control 50 49 of the respective lienholder or purchaser, with or 50 50 without the aid of ministerial action by public 51 1 officials. However, a lien could not become superior 51 2 and a purchase could not create superior rights for 51 3 the purpose of paragraph "b" through an act subsequent 51 4 to the obtaining of a lien or subsequent to a purchase 51 5 which requires the agreement or concurrence of any 51 6 third party or which requires further judicial action 51 7 or ruling. 51 8 d. A transfer of property for or on account of a 51 9 new and contemporaneous consideration, which is under 51 10 paragraph "b" made or suffered after the transfer 51 11 because of delay in perfecting it, does not become a 51 12 transfer for or on account of an antecedent debt if 51 13 any acts required by the applicable law to be 51 14 performed in order to perfect the transfer as against 51 15 liens or a bona fide purchaser's rights are performed 51 16 within twenty-one days or any period expressly allowed 51 17 by the law, whichever is less. A transfer to secure a 51 18 future loan, if a loan is actually made, or a transfer 51 19 which becomes security for a future loan, shall have 51 20 the same effect as a transfer for or on account of a 51 21 new and contemporaneous consideration. 51 22 e. If a lien which is voidable under paragraph 51 23 "a", subparagraph (2), has been dissolved by the 51 24 furnishing of a bond or other obligation, the surety 51 25 of which has been indemnified directly or indirectly 51 26 by the transfer or the creation of a lien upon 51 27 property of an establishment before the filing of a 51 28 petition under this chapter which results in the 51 29 liquidation order, the indemnifying transfer or lien 51 30 is also voidable. 51 31 f. The property affected by a lien voidable under 51 32 paragraphs "a" and "e" is discharged from the lien. 51 33 The property and any of the indemnifying property 51 34 transferred to or for the benefit of a surety shall 51 35 pass to the liquidator. However, the court may on due 51 36 notice order a lien to be preserved for the benefit of 51 37 the estate and the court may direct that the 51 38 conveyance be executed to evidence the title of the 51 39 liquidator. 51 40 g. The court shall have summary jurisdiction of a 51 41 proceeding by a liquidator to hear and determine the 51 42 rights of the parties under this section. Reasonable 51 43 notice of hearing in the proceeding shall be given to 51 44 all parties in interest, including the obligee of a 51 45 releasing bond or other like obligation. Where an 51 46 order is entered for the recovery of indemnifying 51 47 property in kind or for the avoidance of an 51 48 indemnifying lien, upon application of any party in 51 49 interest, the court shall in the same proceeding 51 50 ascertain the value of the property or lien. If the 52 1 value is less than the amount for which the property 52 2 is indemnified or less than the amount of the lien, 52 3 the transferee or lienholder may elect to retain the 52 4 property or lien upon payment of its value, as 52 5 ascertained by the court, to the liquidator within the 52 6 time as fixed by the court. 52 7 h. The liability of a surety under a releasing 52 8 bond or other like obligation is discharged to the 52 9 extent of the value of the indemnifying property 52 10 recovered or the indemnifying lien nullified and 52 11 avoided by the liquidator. Where the property is 52 12 retained under paragraph "g", the liability of the 52 13 surety is discharged to the extent of the amount paid 52 14 to the liquidator. 52 15 i. If a creditor has been preferred for property 52 16 which becomes a part of the establishment's estate, 52 17 and afterward in good faith gives the establishment 52 18 further credit without security of any kind, the 52 19 amount of the new credit remaining unpaid at the time 52 20 of the petition may be set off against the preference 52 21 which would otherwise be recoverable from the 52 22 creditor. 52 23 j. If within four months before the filing of a 52 24 successful petition for liquidation under this 52 25 chapter, or at any time in contemplation of a 52 26 proceeding to liquidate, an establishment, directly or 52 27 indirectly, pays money or transfers property to an 52 28 attorney for services rendered or to be rendered, the 52 29 transaction may be examined by the court on its own 52 30 motion or shall be examined by the court on petition 52 31 of the liquidator. The payment or transfer shall be 52 32 held valid only to the extent of a reasonable amount 52 33 to be determined by the court. The excess may be 52 34 recovered by the liquidator for the benefit of the 52 35 estate. However, where the attorney is in a position 52 36 of influence in the establishment or an affiliate, 52 37 payment of any money or the transfer of any property 52 38 to the attorney for services rendered or to be 52 39 rendered shall be governed by the provisions of 52 40 paragraph "a", subparagraph (2), subparagraph 52 41 subdivision (d). 52 42 k. (1) An officer, manager, employee, 52 43 shareholder, subscriber, attorney, or other person 52 44 acting on behalf of the establishment who knowingly 52 45 participates in giving any preference when the person 52 46 has reasonable cause to believe the establishment is 52 47 or is about to become insolvent at the time of the 52 48 preference is personally liable to the liquidator for 52 49 the amount of the preference. There is an inference 52 50 that reasonable cause exists if the transfer was made 53 1 within four months before the date of filing of this 53 2 successful petition for liquidation. 53 3 (2) A person receiving property from the 53 4 establishment or the benefit of the property of the 53 5 establishment as a preference voidable under paragraph 53 6 "a" is personally liable for the property and shall 53 7 account to the liquidator. 53 8 (3) This subsection shall not prejudice any other 53 9 claim by the liquidator against any person. 53 10 10. CLAIMS OF HOLDER OF VOID OR VOIDABLE RIGHTS. 53 11 a. A claim of a creditor who has received or 53 12 acquired a preference, lien, conveyance, transfer, 53 13 assignment, or encumbrance, voidable under this 53 14 chapter, shall not be allowed unless the creditor 53 15 surrenders the preference, lien, conveyance, transfer, 53 16 assignment, or encumbrance. If the avoidance is 53 17 effected by a proceeding in which a final judgment has 53 18 been entered, the claim shall not be allowed unless 53 19 the money is paid or the property is delivered to the 53 20 liquidator within thirty days from the date of the 53 21 entering of the final judgment. However, the court 53 22 having jurisdiction over the liquidation may allow 53 23 further time if there is an appeal or other 53 24 continuation of the proceeding. 53 25 b. A claim allowable under paragraph "a" by reason 53 26 of a voluntary or involuntary avoidance, preference, 53 27 lien, conveyance, transfer, assignment, or encumbrance 53 28 may be filed as an excused late filing under 53 29 subsection 12, if filed within thirty days from the 53 30 date of the avoidance or within the further time 53 31 allowed by the court under paragraph "a". 53 32 11. LIQUIDATOR'S PROPOSAL TO DISTRIBUTE ASSETS. 53 33 a. From time to time as assets become available, 53 34 the liquidator shall make application to the court for 53 35 approval of a proposal to disburse assets out of 53 36 marshaled assets. 53 37 b. The proposal shall at least include provisions 53 38 for all of the following: 53 39 (1) Reserving amounts for the payment of all the 53 40 following: 53 41 (a) Expenses of administration. 53 42 (b) To the extent of the value of the security 53 43 held, the payment of claims of secured creditors. 53 44 (c) Claims falling within the priorities 53 45 established in subsection 18, paragraphs "a" and "b". 53 46 (2) Disbursement of the assets marshaled to date 53 47 and subsequent disbursement of assets as they become 53 48 available. 53 49 c. Action on the application may be taken by the 53 50 court provided that the liquidator's proposal complies 54 1 with paragraph "b". 54 2 12. FILING OF CLAIMS. 54 3 a. Proof of all claims shall be filed with the 54 4 liquidator in the form required by subsection 13 on or 54 5 before the last day for filing specified in the notice 54 6 required under subsection 4. 54 7 b. The liquidator may permit a claimant making a 54 8 late filing to share in distributions, whether past or 54 9 future, as if the claimant were not late, to the 54 10 extent that the payment will not prejudice the orderly 54 11 administration of the liquidation under any of the 54 12 following circumstances: 54 13 (1) The existence of the claim was not known to 54 14 the claimant and the claimant filed the claim as 54 15 promptly as reasonably possible after learning of it. 54 16 (2) A transfer to a creditor was avoided under 54 17 subsections 7 through 9, or was voluntarily 54 18 surrendered under subsection 10, and the filing 54 19 satisfies the conditions of subsection 10. 54 20 (3) The valuation under subsection 17 of security 54 21 held by a secured creditor shows a deficiency, which 54 22 is filed within thirty days after the valuation. 54 23 c. The liquidator may consider any claim filed 54 24 late and permit the claimant to receive distributions 54 25 which are subsequently declared on any claims of the 54 26 same or lower priority if the payment does not 54 27 prejudice the orderly administration of the 54 28 liquidation. The late-filing claimant shall receive 54 29 at each distribution the same percentage of the amount 54 30 allowed on the claim as is then being paid to 54 31 claimants of any lower priority. This shall continue 54 32 until the claim has been paid in full. 54 33 13. PROOF OF CLAIM. 54 34 a. Proof of claim shall consist of a statement 54 35 signed by the claimant that includes all of the 54 36 following that are applicable: 54 37 (1) The particulars of the claim, including the 54 38 consideration given for it. 54 39 (2) The identity and amount of the security on the 54 40 claim. 54 41 (3) The payments, if any, made on the debt. 54 42 (4) A statement that the sum claimed is justly 54 43 owing and that there is no setoff, counterclaim, or 54 44 defense to the claim. 54 45 (5) Any right of priority of payment or other 54 46 specific right asserted by the claimant. 54 47 (6) A copy of the written instrument which is the 54 48 foundation of the claim. 54 49 (7) The name and address of the claimant and the 54 50 attorney who represents the claimant, if any. 55 1 b. A claim need not be considered or allowed if it 55 2 does not contain all the information identified in 55 3 paragraph "a" which is applicable. The liquidator may 55 4 require that a prescribed form be used and may require 55 5 that other information and documents be included. 55 6 c. At any time the liquidator may request the 55 7 claimant to present information or evidence 55 8 supplementary to that required under paragraph "a", 55 9 and may take testimony under oath, require production 55 10 of affidavits or depositions, or otherwise obtain 55 11 additional information or evidence. 55 12 d. A judgment or order against an establishment 55 13 entered after the date of filing of a successful 55 14 petition for liquidation, or a judgment or order 55 15 against the establishment entered at any time by 55 16 default or by collusion need not be considered as 55 17 evidence of liability or of the amount of damages. A 55 18 judgment or order against an establishment before the 55 19 filing of the petition need not be considered as 55 20 evidence of liability or of the amount of damages. 55 21 14. SPECIAL CLAIMS. 55 22 a. A claim may be allowed even if contingent, if 55 23 it is filed pursuant to subsection 12. The claim may 55 24 be allowed and the claimant may participate in all 55 25 distributions declared after it is filed to the extent 55 26 that it does not prejudice the orderly administration 55 27 of the liquidation. 55 28 b. Claims that are due except for the passage of 55 29 time shall be treated as absolute claims are treated. 55 30 However, the claims may be discounted at the legal 55 31 rate of interest. 55 32 c. Claims made under employment contracts by 55 33 directors, principal officers, or persons in fact 55 34 performing similar functions or having similar powers 55 35 are limited to payment for services rendered prior to 55 36 the issuance of an order of liquidation under 55 37 subsection 2. 55 38 15. DISPUTED CLAIMS. 55 39 a. If a claim is denied in whole or in part by the 55 40 liquidator, written notice of the determination shall 55 41 be given to the claimant or the claimant's attorney by 55 42 first-class mail at the address shown in the proof of 55 43 claim. Within sixty days from the mailing of the 55 44 notice, the claimant may file objections with the 55 45 liquidator. Unless a filing is made, the claimant 55 46 shall not further object to the determination. 55 47 b. If objections are filed with the liquidator and 55 48 the liquidator does not alter the denial of the claim 55 49 as a result of the objections, the liquidator shall 55 50 ask the court for a hearing as soon as practicable and 56 1 give notice of the hearing by first-class mail to the 56 2 claimant or the claimant's attorney and to any other 56 3 persons directly affected. The notice shall be given 56 4 not less than ten nor more than thirty days before the 56 5 date of hearing. The matter shall be heard by the 56 6 court or by a court-appointed referee. The referee 56 7 shall submit findings of fact along with a 56 8 recommendation. 56 9 16. CLAIMS OF OTHER PERSON. If a creditor, whose 56 10 claim against an establishment is secured in whole or 56 11 in part by the undertaking of another person, fails to 56 12 prove and file that claim, then the other person may 56 13 do so in the creditor's name and shall be subrogated 56 14 to the rights of the creditor, whether the claim has 56 15 been filed by the creditor or by the other person in 56 16 the creditor's name to the extent that the other 56 17 person discharges the undertaking. However, in the 56 18 absence of an agreement with the creditor to the 56 19 contrary, the other person is not entitled to any 56 20 distribution until the amount paid to the creditor on 56 21 the undertaking plus the distributions paid on the 56 22 claim from the establishment's estate to the creditor 56 23 equal the amount of the entire claim of the creditor. 56 24 An excess received by the creditor shall be held by 56 25 the creditor in trust for the other person. 56 26 17. SECURED CREDITOR'S CLAIMS. 56 27 a. The value of the security held by a secured 56 28 creditor shall be determined in one of the following 56 29 ways, as the court may direct: 56 30 (1) By converting the security into money 56 31 according to the terms of the agreement pursuant to 56 32 which the security was delivered to the creditors. 56 33 (2) By agreement, arbitration, compromise, or 56 34 litigation between the creditor and the liquidator. 56 35 b. The determination shall be under the 56 36 supervision and control of the court with due regard 56 37 for the recommendation of the liquidator. The amount 56 38 so determined shall be credited upon the secured 56 39 claim. A deficiency shall be treated as an unsecured 56 40 claim. If the claimant surrenders the security to the 56 41 liquidator, the entire claim shall be allowed as if 56 42 unsecured. 56 43 18. PRIORITY OF DISTRIBUTION. The priority of 56 44 distribution of claims from the establishment's estate 56 45 shall be in accordance with the order in which each 56 46 class of claims is set forth. Claims in each class 56 47 shall be paid in full or adequate funds retained for 56 48 the payment before the members of the next class 56 49 receive any payment. Subclasses shall not be 56 50 established within a class. The order of distribution 57 1 of claims is as follows: 57 2 a. CLASS 1. The costs and expenses of 57 3 administration, including but not limited to the 57 4 following: 57 5 (1) Actual and necessary costs of preserving or 57 6 recovering the assets of the establishment. 57 7 (2) Compensation for all authorized services 57 8 rendered in the liquidation. 57 9 (3) Necessary filing fees. 57 10 (4) Fees and mileage payable to witnesses. 57 11 (5) Authorized reasonable attorney fees and other 57 12 professional services rendered in the liquidation. 57 13 b. CLASS 2. Reasonable compensation to employees 57 14 for services performed to the extent that they do not 57 15 exceed two months of monetary compensation and 57 16 represent payment for services performed within one 57 17 year before the filing of the petition for 57 18 liquidation. Officers and directors are not entitled 57 19 to the benefit of this priority. The priority is in 57 20 lieu of other similar priority which may be authorized 57 21 by law as to wages or compensation of employees. 57 22 c. CLASS 3. Claims under purchase agreements. 57 23 d. CLASS 4. Claims of general creditors. 57 24 e. CLASS 5. Claims of the federal or of any state 57 25 or local government. Claims, including those of a 57 26 governmental body for a penalty or forfeiture, are 57 27 allowed in this class only to the extent of the 57 28 pecuniary loss sustained from the act, transaction, or 57 29 proceeding out of which the penalty or forfeiture 57 30 arose, with reasonable and actual costs incurred. The 57 31 remainder of such claims shall be postponed to the 57 32 class of claims under paragraph "g". 57 33 f. CLASS 6. Claims filed late or any other claims 57 34 other than claims under paragraph "g". 57 35 g. CLASS 7. The claims of shareholders or other 57 36 owners. 57 37 19. LIQUIDATOR'S RECOMMENDATIONS TO THE COURT. 57 38 a. The liquidator shall review claims duly filed 57 39 in the liquidation and shall make further 57 40 investigation as necessary. The liquidator may 57 41 compound, compromise, or in any other manner negotiate 57 42 the amount for which claims will be recommended to the 57 43 court except where the liquidator is required by law 57 44 to accept claims as settled by a person or 57 45 organization. Unresolved disputes shall be determined 57 46 under subsection 15. As soon as practicable, the 57 47 liquidator shall present to the court a report of the 57 48 claims against the establishment with the liquidator's 57 49 recommendations. The report shall include the name 57 50 and address of each claimant and the amount of the 58 1 claim finally recommended. 58 2 b. The court may approve, disapprove, or modify 58 3 the report on claims by the liquidator. Reports not 58 4 modified by the court within sixty days following 58 5 submission by the liquidator shall be treated by the 58 6 liquidator as allowed claims, subject to later 58 7 modification or to rulings made by the court pursuant 58 8 to subsection 15. A claim under a policy of insurance 58 9 shall not be allowed for an amount in excess of the 58 10 applicable policy limits. 58 11 20. DISTRIBUTION OF ASSETS. Under the direction 58 12 of the court, the liquidator shall pay distributions 58 13 in a manner that will ensure the proper recognition of 58 14 priorities and a reasonable balance between the 58 15 expeditious completion of the liquidation and the 58 16 protection of unliquidated and undetermined claims, 58 17 including third-party claims. Distribution of assets 58 18 in kind may be made at valuations set by agreement 58 19 between the liquidator and the creditor and approved 58 20 by the court. 58 21 21. UNCLAIMED AND WITHHELD FUNDS. 58 22 a. Unclaimed funds subject to distribution 58 23 remaining in the liquidator's hands when the 58 24 liquidator is ready to apply to the court for 58 25 discharge, including the amount distributable to a 58 26 creditor, owner, or other person who is unknown or 58 27 cannot be found, shall be deposited with the treasurer 58 28 of the state, and shall be paid without interest, 58 29 except as provided in subsection 18, to the person 58 30 entitled or to the person's legal representative upon 58 31 proof satisfactory to the treasurer of state of the 58 32 right to the funds. Any amount on deposit not claimed 58 33 within six years from the discharge of the liquidator 58 34 is deemed to have been abandoned and shall become the 58 35 property of the state without formal escheat 58 36 proceedings and be transferred to the insurance 58 37 division regulatory fund. 58 38 b. Funds withheld under subsection 14 and not 58 39 distributed shall upon discharge of the liquidator be 58 40 deposited with the treasurer of state and paid 58 41 pursuant to subsection 18. Sums remaining which under 58 42 subsection 18 would revert to the undistributed assets 58 43 of the establishment shall be transferred to the 58 44 insurance division regulatory fund and become the 58 45 property of the state as provided under paragraph "a", 58 46 unless the commissioner in the commissioner's 58 47 discretion petitions the court to reopen the 58 48 liquidation pursuant to subsection 23. 58 49 c. Notwithstanding any other provision of this 58 50 chapter, funds as identified in paragraph "a", with 59 1 the approval of the court, shall be made available to 59 2 the commissioner for use in the detection and 59 3 prevention of future insolvencies. The commissioner 59 4 shall hold these funds in the insurance division 59 5 regulatory fund and shall pay without interest, except 59 6 as provided in subsection 18, to the person entitled 59 7 to the funds or to the person's legal representative 59 8 upon proof satisfactory to the commissioner of the 59 9 person's right to the funds. The funds shall be held 59 10 by the commissioner for a period of two years at which 59 11 time the rights and duties to the unclaimed funds 59 12 shall vest in the commissioner. 59 13 22. TERMINATION OF PROCEEDINGS. 59 14 a. When all assets justifying the expense of 59 15 collection and distribution have been collected and 59 16 distributed under this chapter, the liquidator shall 59 17 apply to the court for discharge. The court may grant 59 18 the discharge and make any other orders, including an 59 19 order to transfer remaining funds that are 59 20 uneconomical to distribute, as appropriate. 59 21 b. Any other person may apply to the court at any 59 22 time for an order under paragraph "a". If the 59 23 application is denied, the applicant shall pay the 59 24 costs and expenses of the liquidator in resisting the 59 25 application, including a reasonable attorney fee. 59 26 23. REOPENING LIQUIDATION. At any time after the 59 27 liquidation proceeding has been terminated and the 59 28 liquidator discharged, the commissioner or other 59 29 interested party may petition the court to reopen the 59 30 proceedings for good cause including the discovery of 59 31 additional assets. The court shall order the 59 32 proceeding reopened if it is satisfied that there is 59 33 justification for the reopening. 59 34 24. DISPOSITION OF RECORDS DURING AND AFTER 59 35 TERMINATION OF LIQUIDATION. If it appears to the 59 36 commissioner that the records of an establishment in 59 37 the process of liquidation or completely liquidated 59 38 are no longer useful, the commissioner may recommend 59 39 to the court and the court shall direct what records 59 40 shall be retained for future reference and what 59 41 records shall be destroyed. 59 42 25. EXTERNAL AUDIT OF LIQUIDATOR'S BOOKS. The 59 43 court may order audits to be made of the books of the 59 44 commissioner relating to a liquidation established 59 45 under this chapter, and a report of each audit shall 59 46 be filed with the commissioner and with the court. 59 47 The books, records, and other documents of the 59 48 liquidation shall be made available to the auditor at 59 49 any time without notice. The expense of an audit 59 50 shall be considered a cost of administration of the 60 1 liquidation. 60 2 Sec. . Section 537A.10, subsection 1, paragraph 60 3 c, subparagraph (3), Code 2001, is amended to read as 60 4 follows: 60 5 (3) "Franchise" also does not include any contract 60 6 under which a petroleum retailer or petroleum 60 7 distributor is authorized or permitted to occupy 60 8 leased marketing premises, which premises are to be 60 9 employed in connection with the sale, consignment, or 60 10 distribution of motor fuel under a trademark which is 60 11 owned or controlled by a refiner which is regulated by 60 12 the federal Petroleum Marketing Practices Act, 15 60 13 U.S.C. } 2801 et seq. The term "refiner" means any 60 14 person engaged in the refining of crude oil to produce 60 15 motor fuel, and includes any affiliate of such person. 60 16 "Franchise" also does not include a contract entered 60 17 into by any person regulated under chapter 123, 322, 60 18 322A, 322B, 322C, 322D, 322F,522522B, or 543B, or a 60 19 contract establishing a franchise relationship with 60 20 respect to the sale of construction equipment, lawn or 60 21 garden equipment, or real estate. 60 22 Sec. . 2001 Iowa Acts, Senate File 500, section 60 23 39, is amended to read as follows: 60 24 SEC. 39. EFFECTIVE DATE. Sections 4, 5, 7 through 60 25 11, 13 through 22, 34, and 38 of this Act take effect 60 26 January 1, 2002. 60 27 Sec. . Chapters 523A and 523E, Code 2001, are 60 28 repealed." 60 29 # . Title page, line 1, by inserting after the 60 30 word "Act" the following: "concerning regulated 60 31 industries under the jurisdiction of the commissioner 60 32 of insurance relating to various issues relating to 60 33 insurance,". 60 34 #3. Title page, line 7, by inserting after the 60 35 word "requirements" the following: ", and relating to 60 36 cemetery and funeral merchandise and funeral services, 60 37 establishing permit and purchase agreement 60 38 requirements, establishing and appropriating fees, and 60 39 providing administration, enforcement, and liquidation 60 40 procedures, and penalties". 60 41 #4. By renumbering as necessary. 60 42 SF 473H 60 43 av/es/25
Text: S03433 Text: S03435 Text: S03400 - S03499 Text: S Index Bills and Amendments: General Index Bill History: General Index
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