Senate File 559 - Reprinted
SENATE FILE
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO SSB 1197)
Passed Senate, Date Passed House, Date
Vote: Ayes Nays Vote: Ayes Nays
Approved
A BILL FOR
1 An Act relating to cemetery and funeral merchandise, funeral
2 services, and cemeteries and providing fees and penalties.
3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
4 TLSB 1191SV 82
5 av/gg/14
PAG LIN
1 1 DIVISION I
1 2 CEMETERY AND FUNERAL MERCHANDISE,
1 3 FUNERAL SERVICES, AND CEMETERIES == REGULATION
1 4 Section 1. Section 22.7, Code 2007, is amended by adding
1 5 the following new subsection:
1 6 NEW SUBSECTION. 58. Information filed with the
1 7 commissioner of insurance pursuant to sections 523A.204 and
1 8 523A.502A.
1 9 Sec. 2. Section 523A.102, subsection 6, Code 2007, is
1 10 amended to read as follows:
1 11 6. "Commissioner" means the commissioner of insurance or
1 12 the deputy administrator authorized in section 523A.801 to the
1 13 extent the commissioner delegates functions to the deputy
1 14 administrator commissioner's designee.
1 15 Sec. 3. Section 523A.102, subsection 11, Code 2007, is
1 16 amended by striking the subsection.
1 17 Sec. 4. Section 523A.102, Code 2007, is amended by adding
1 18 the following new subsection:
1 19 NEW SUBSECTION. 26A. "Sales agent" means a person,
1 20 including an employee, who is authorized by a seller to sell
1 21 cemetery merchandise, funeral merchandise, funeral services,
1 22 or a combination thereof, on behalf of the seller.
1 23 Sec. 5. Section 523A.102, subsection 27, Code 2007, is
1 24 amended to read as follows:
1 25 27. "Seller" or "preneed seller" means a person doing
1 26 business within this state, including a person doing business
1 27 within this state who sells insurance, who advertises, sells,
1 28 promotes, or offers to furnish cemetery merchandise, funeral
1 29 merchandise, funeral services, or a combination thereof when
1 30 performance or delivery may be more than one hundred twenty
1 31 days following the initial payment on the account whether the
1 32 transaction is completed or offered in person, through the
1 33 mail, over the telephone, by the internet, or through any
1 34 other means of commerce. "Seller" or "preneed seller"
1 35 includes any person performing any term of a purchase
2 1 agreement executed within this state, and any person
2 2 identified under a burial account as the provider of cemetery
2 3 merchandise, funeral merchandise, funeral services, or a
2 4 combination thereof.
2 5 Sec. 6. Section 523A.201, subsection 3, Code 2007, is
2 6 amended to read as follows:
2 7 3. If a purchase agreement for cemetery merchandise,
2 8 funeral merchandise, funeral services, or a combination
2 9 thereof provides that payments are to be made in installments,
2 10 the seller shall deposit eighty percent of each payment in the
2 11 trust fund until the full amount required to be placed in
2 12 trust has been deposited. If the purchase agreement is
2 13 financed with or sold to a financial institution, the purchase
2 14 agreement shall be considered paid in full and the trust
2 15 requirements shall be satisfied within fifteen days after the
2 16 close of the month in which the seller receives funds from the
2 17 financial institution.
2 18 Sec. 7. Section 523A.201, subsection 5, Code 2007, is
2 19 amended by striking the subsection and inserting in lieu
2 20 thereof the following:
2 21 5. Unless a seller deposits all of each payment in a trust
2 22 fund that meets the requirements of this section and section
2 23 523A.202, the seller shall have a fidelity bond or similar
2 24 insurance in an amount of not less than fifty thousand dollars
2 25 to protect against the loss of purchaser payments not placed
2 26 in trust within the time period required by this section and
2 27 section 523A.202. The commissioner may require a greater
2 28 amount as the commissioner determines is necessary. If the
2 29 seller changes ownership, the fidelity bond or similar
2 30 insurance shall continue in force for at least one year after
2 31 the transfer of ownership.
2 32 Sec. 8. Section 523A.201, subsections 8 and 10, Code 2007,
2 33 are amended to read as follows:
2 34 8. Interest or income earned on amounts deposited in trust
2 35 shall remain in trust under the same terms and conditions as
3 1 payments made under the purchase agreement, except that the
3 2 seller may withdraw so much of the interest or income as
3 3 represents the difference between the amount needed to adjust
3 4 the trust funds for inflation as set by the commissioner based
3 5 on the consumer price index and the interest or income earned
3 6 during the preceding year not to exceed fifty percent of the
3 7 total interest or income on a calendar=year basis. The early
3 8 withdrawal of interest or income under this provision does not
3 9 affect the purchaser's right to a credit of such interest or
3 10 income in the event of a nonguaranteed price agreement,
3 11 cancellation, or nonperformance by the seller.
3 12 10. If a seller voluntarily or involuntarily ceases doing
3 13 business and the seller's obligation to provide merchandise or
3 14 services has not been assumed by another establishment seller
3 15 holding a current establishment permit preneed seller's
3 16 license, all trust funds, including accrued interest or
3 17 income, shall be repaid to the purchaser within one hundred
3 18 twenty thirty days following the seller's cessation of
3 19 business or, in the event of circumstances where a payment is
3 20 not possible within one hundred twenty days, as soon as is
3 21 reasonably practicable. A seller may petition the
3 22 commissioner, upon a showing of good cause, for a longer
3 23 period of time for repayment. A seller shall notify the
3 24 commissioner at least thirty days prior to ceasing business.
3 25 Sec. 9. Section 523A.202, subsection 4, Code 2007, is
3 26 amended to read as follows:
3 27 4. This section does not prohibit moving trust funds from
3 28 one financial institution to another if the commissioner is
3 29 notified of the change within thirty days of the transfer of
3 30 the trust funds.
3 31 Sec. 10. Section 523A.203, Code 2007, is amended by adding
3 32 the following new subsection:
3 33 NEW SUBSECTION. 7. Unless proceeding under section
3 34 523A.403, investment and management decisions for all trust
3 35 funds shall be made in accordance with the provisions of
4 1 section 633A.4302.
4 2 Sec. 11. Section 523A.204, Code 2007, is amended by
4 3 striking the section and inserting in lieu thereof the
4 4 following:
4 5 523A.204 PRENEED SELLER ANNUAL REPORTING REQUIREMENTS.
4 6 1. A preneed seller shall file with the commissioner not
4 7 later than April 1 of each year an annual report on a form
4 8 prescribed by the commissioner.
4 9 2. A preneed seller filing an annual report shall pay a
4 10 filing fee of ten dollars per purchase agreement sold during
4 11 the year covered by the report. Duplicate fees are not
4 12 required for the same purchase agreement. If a purchase
4 13 agreement has multiple sellers, the fee shall be paid by the
4 14 preneed seller actually providing the merchandise and
4 15 services.
4 16 3. All records maintained by the commissioner under this
4 17 section shall be confidential pursuant to section 22.7,
4 18 subsection 58, and shall not be made available for inspection
4 19 or copying except upon the approval of the commissioner or the
4 20 attorney general.
4 21 4. The commissioner shall levy an administrative penalty
4 22 in the amount of five hundred dollars against a preneed seller
4 23 that fails to file the annual report when due, payable to the
4 24 state for deposit in the general fund of the state.
4 25 5. A preneed seller that fails to file the annual report
4 26 when due shall immediately cease soliciting or executing
4 27 purchase agreements until the annual report is filed and any
4 28 administrative penalty assessed has been paid.
4 29 Sec. 12. Section 523A.206, Code 2007, is amended by
4 30 striking the section and inserting in lieu thereof the
4 31 following:
4 32 523A.206 EXAMINATIONS == AUTHORITY AND SCOPE.
4 33 1. The commissioner may conduct an examination under this
4 34 chapter of any seller as often as the commissioner deems
4 35 appropriate. If a seller has a trust arrangement, the
5 1 commissioner shall conduct an examination of such seller doing
5 2 business in this state not less than once every three years
5 3 unless the seller has provided to the commissioner, on an
5 4 annual basis, a certified copy of an audit conducted by an
5 5 independent certified public accountant verifying compliance
5 6 with this chapter. The commissioner may require an audit of a
5 7 seller, or other person by a certified public accountant to
5 8 verify compliance with the requirements of this chapter,
5 9 including rules adopted and orders issued pursuant to this
5 10 chapter.
5 11 2. A seller shall reimburse the division for the expense
5 12 of conducting the examination, including an audit conducted by
5 13 a certified public accountant, unless the commissioner waives
5 14 this requirement, or the seller has previously provided to the
5 15 commissioner a certified copy of an audit conducted by an
5 16 independent certified public accountant verifying compliance
5 17 with this chapter for each year in question and the
5 18 examination conducted by the commissioner does not disclose
5 19 that the seller has not complied with this chapter for the
5 20 years in question. The expense of an examination involving
5 21 multiple sellers or other persons shall be prorated among them
5 22 upon any reasonable basis as determined by the commissioner.
5 23 3. For purposes of completing an examination under this
5 24 chapter, the commissioner may examine or investigate any
5 25 person, or the business of any person, if the examination or
5 26 investigation is, in the sole discretion of the commissioner,
5 27 necessary or material to the examination of the seller.
5 28 4. Upon determining that an examination should be
5 29 conducted, the commissioner may appoint one or more examiners
5 30 to perform the examination and instruct those examiners as to
5 31 the scope of the examination.
5 32 5. A seller, or other person from whom information is
5 33 sought, and its officers, directors, employees, and agents
5 34 shall provide to the examiners appointed under subsection 4,
5 35 timely, convenient, and free access at their offices, at all
6 1 reasonable hours, to all books, records, accounts, papers,
6 2 documents, and all electronic or other recordings related to
6 3 the property, assets, business, and affairs of the seller
6 4 being examined and shall facilitate the examination as much as
6 5 possible.
6 6 a. The refusal of a seller, by its officers, directors,
6 7 employees, or agents, to submit to an examination or to comply
6 8 with a reasonable written request of an examiner shall
6 9 constitute grounds for the suspension, revocation, or
6 10 nonrenewal of any license held by the seller to engage in
6 11 business subject to the commissioner's jurisdiction.
6 12 b. If a seller declines or refuses to submit to an
6 13 examination as provided in this chapter, the commissioner
6 14 shall immediately suspend, revoke, or nonrenew any license
6 15 held by the seller or business to engage in business subject
6 16 to the commissioner's jurisdiction, and shall report the
6 17 commissioner's action to the attorney general, who shall
6 18 immediately apply to the district court for the appointment of
6 19 a receiver to administer the final affairs of the seller.
6 20 6. The commissioner shall not make information obtained in
6 21 the course of an examination public, except when a duty under
6 22 this chapter requires the commissioner to take action against
6 23 a seller or to cooperate with another law enforcement agency,
6 24 or when the commissioner is called as a witness in a civil or
6 25 criminal proceeding.
6 26 7. This section shall not be construed to limit the
6 27 commissioner's authority to terminate or suspend any
6 28 examination in order to pursue other legal or regulatory
6 29 actions pursuant to this chapter. Findings of fact and
6 30 conclusions made pursuant to an examination are deemed to be
6 31 prima facie evidence in any legal or regulatory action.
6 32 Sec. 13. NEW SECTION. 523A.207 AUDITS BY CERTIFIED
6 33 PUBLIC ACCOUNTANTS.
6 34 A purchase agreement shall not be sold or transferred, as
6 35 part of the sale of a business or the assets of a business,
7 1 until an audit has been performed by a certified public
7 2 accountant and filed with the commissioner that expresses the
7 3 auditor's opinion of the adequacy of funding related to the
7 4 purchase agreements to be sold or transferred.
7 5 Sec. 14. Section 523A.404, subsection 1, unnumbered
7 6 paragraph 1, Code 2007, is amended to read as follows:
7 7 Trust requirements do not apply to payments made pursuant
7 8 to a purchase agreement executed prior to July 1, 2007, for
7 9 outer burial containers made of either polystyrene or
7 10 polypropylene or cemetery merchandise delivered to the
7 11 purchaser or stored in an independent third=party storage
7 12 facility not owned or controlled by the seller when approved
7 13 by the commissioner. The seller or the storage facility must
7 14 demonstrate that they will do all of the following:
7 15 Sec. 15. Section 523A.404, subsection 1, paragraphs f and
7 16 h, Code 2007, are amended to read as follows:
7 17 f. Use a method of storage that allows for visual audits
7 18 examinations of the merchandise.
7 19 h. File a consent to be audited examined and inspected by
7 20 the commissioner.
7 21 Sec. 16. Section 523A.501, Code 2007, is amended to read
7 22 as follows:
7 23 523A.501 ESTABLISHMENT == PERMITS PRENEED SELLERS ==
7 24 LICENSES.
7 25 1. A person shall not advertise, sell, promote, or offer
7 26 to furnish cemetery merchandise, funeral merchandise, funeral
7 27 services, or a combination thereof when performance or
7 28 delivery may be more than one hundred twenty days following
7 29 the initial payment on the account without an establishment
7 30 permit a preneed seller's license. Each establishment must
7 31 have an establishment permit.
7 32 2. An application for an establishment permit a preneed
7 33 seller's license shall be filed on a form prescribed by the
7 34 commissioner, and be accompanied by a fifty dollar filing fee,
7 35 and include a copy of each purchase agreement the person will
8 1 use for sales of cemetery merchandise, funeral merchandise,
8 2 funeral services, or a combination thereof.
8 3 3. The application shall contain:
8 4 a. The name and address of the establishment.
8 5 b. The name and address of any additional provider of
8 6 cemetery merchandise, funeral merchandise, funeral services,
8 7 or a combination thereof.
8 8 c. The name and address of each owner, officer, or other
8 9 official of the establishment, including when relevant the
8 10 chief executive officer and the members of the board of
8 11 directors.
8 12 d. A description of any common business enterprise or
8 13 parent company.
8 14 e. The types of cemetery merchandise, funeral merchandise,
8 15 funeral services, or a combination thereof to be sold.
8 16 f. The types of trust or trust alternatives utilized by
8 17 the establishment and a list of the financial institutions,
8 18 storage facilities, surety companies, and insurance companies
8 19 utilized by the establishment on a regular basis.
8 20 4. A permit holder shall inform the commissioner of
8 21 changes in the information required to be provided by
8 22 subsection 3 within thirty days of the change.
8 23 3. a. The commissioner shall request and obtain,
8 24 notwithstanding section 692.2, subsection 5, criminal history
8 25 data for any applicant for an initial license issued pursuant
8 26 to this section, any applicant for reinstatement of a license
8 27 issued pursuant to this section, or any licensee who is being
8 28 monitored as a result of a commission order or agreement
8 29 resolving an administrative disciplinary action, for the
8 30 purpose of evaluating the applicant's or licensee's
8 31 eligibility for licensure or suitability for continued
8 32 practice as a preneed seller. The commissioner shall adopt
8 33 rules pursuant to chapter 17A to implement this section. The
8 34 commissioner shall inform the applicant or licensee of the
8 35 criminal history requirement and obtain a signed waiver from
9 1 the applicant or licensee prior to submitting a criminal
9 2 history data request.
9 3 b. A request for criminal history data shall be submitted
9 4 to the department of public safety, division of criminal
9 5 investigation, pursuant to section 692.2, subsection 1. The
9 6 commissioner may also require such applicants or licensees to
9 7 provide a full set of fingerprints, in a form and manner
9 8 prescribed by the commission. Such fingerprints may be
9 9 submitted to the federal bureau of investigation through the
9 10 state criminal history repository for a national criminal
9 11 history check. The commissioner may authorize alternate
9 12 methods or sources for obtaining criminal history record
9 13 information. The commissioner may, in addition to any other
9 14 fees, charge and collect such amounts as may be incurred by
9 15 the commissioner, the department of public safety, or the
9 16 federal bureau of investigation in obtaining criminal history
9 17 information. Amounts collected shall be considered repayment
9 18 receipts as defined in section 8.2.
9 19 c. Criminal history information relating to an applicant
9 20 or licensee obtained by the commissioner pursuant to this
9 21 section is confidential. The commissioner may, however, use
9 22 such information in a license denial proceeding.
9 23 4. The commissioner shall request and obtain a financial
9 24 history for any applicant for an initial license issued
9 25 pursuant to this section, any applicant for reinstatement of a
9 26 license issued pursuant to this section, or any licensee who
9 27 is being monitored as a result of a commission order or
9 28 agreement resolving an administrative disciplinary action, for
9 29 the purpose of evaluating the applicant's or licensee's
9 30 eligibility for licensure or suitability for continued
9 31 practice as a preneed seller. "Financial history" means the
9 32 record of a person's current loans, the date of a person's
9 33 loans, the amount of the loans, the person's payment record on
9 34 the loans, current liens against the person's property, and
9 35 the person's most recent financial statement setting forth the
10 1 assets, liabilities, and the net worth of the person.
10 2 5. An establishment permit A preneed seller's license is
10 3 not assignable or transferable. A permit holder licensee
10 4 selling all or part of an establishment a business entity that
10 5 has a preneed seller's license shall cancel the permit
10 6 license, and the purchaser shall apply for a new permit
10 7 license in the purchaser's name within thirty days of the
10 8 sale.
10 9 6. If no denial order is in effect and no proceeding is
10 10 pending under section 523A.503, the application becomes
10 11 effective at noon of the thirtieth day after a completed
10 12 application or an amendment completing the application is
10 13 filed, unless waived by the applicant. The commissioner may
10 14 specify an earlier effective date. Automatic effectiveness
10 15 under this subsection shall not be deemed approval of the
10 16 application. If the commissioner does not grant the permit
10 17 license, the commissioner shall notify the person in writing
10 18 of the reasons for the denial.
10 19 7. An initial permit is valid for two years from the date
10 20 the application is filed. A permit may be renewed for two
10 21 years by filing the form prescribed by the commissioner under
10 22 subsection 2, accompanied by a ten dollar renewal fee.
10 23 Submission of purchase agreements is not required for renewals
10 24 unless the purchase agreements have been modified since the
10 25 last filing. A preneed seller's license shall remain valid
10 26 until it is denied, suspended, revoked, or surrendered.
10 27 8. The commissioner may by rule create or accept a
10 28 multijurisdiction establishment permit preneed seller's
10 29 license. If the establishment permit preneed seller's license
10 30 is issued by another jurisdiction, the rules shall require the
10 31 filing of an application or notice form and payment of the
10 32 applicable filing fee of fifty dollars for an initial
10 33 application and ten dollars for a renewal application. The
10 34 application or notice form utilized and the effective dates
10 35 and terms of the permit license may vary from the provisions
11 1 set forth in subsections 2, 3, and 7 this section.
11 2 Sec. 17. Section 523A.502, Code 2007, is amended to read
11 3 as follows:
11 4 523A.502 SALES PERMITS AGENTS == LICENSES.
11 5 1. A person shall not advertise, sell, promote, or offer
11 6 to furnish cemetery merchandise, funeral merchandise, funeral
11 7 services, or a combination thereof when performance or
11 8 delivery may be more than one hundred twenty days following
11 9 initial payment on the account without unless the person has a
11 10 sales permit. A permit holder must be an employee or license
11 11 and is a sales agent of a person holding an establishment
11 12 permit who can deliver the cemetery merchandise, funeral
11 13 merchandise, funeral services, or a combination thereof being
11 14 sold a preneed seller's license. A person must have a sales
11 15 permit for each establishment at which the person works.
11 16 However, a person may apply for a sales permit covering
11 17 multiple establishments, if the establishments have common
11 18 ownership. The establishment permit holder preneed seller
11 19 licensee is liable for the acts of its employees and sales
11 20 agents performed in advertising, selling, promoting, or
11 21 offering to furnish, upon the future death of a person named
11 22 or implied in a purchase agreement, cemetery merchandise,
11 23 funeral merchandise, funeral services, or a combination
11 24 thereof.
11 25 2. This chapter does not permit a person to practice
11 26 mortuary science without a license. A person holding a
11 27 current sales permit license may advertise, sell, promote, or
11 28 offer to furnish a funeral director's services as an employee
11 29 or agent of a funeral establishment furnishing the funeral
11 30 services under chapter 156.
11 31 3. An application for a sales permit license shall be
11 32 filed on a form prescribed by the commissioner and be
11 33 accompanied by a five dollar filing fee in an amount set by
11 34 the commissioner by rule.
11 35 4. The application shall contain:
12 1 a. The name and address of the person.
12 2 b. The name and address of the person's employer and each
12 3 establishment on whose behalf the person will be advertising,
12 4 selling, promoting, or offering to furnish cemetery
12 5 merchandise, funeral merchandise, funeral services, or a
12 6 combination thereof.
12 7 c. The name and address of the provider who will provide
12 8 the cemetery merchandise, funeral merchandise, funeral
12 9 services, or a combination thereof if different from the
12 10 person's employer.
12 11 4. a. The commissioner shall request and obtain,
12 12 notwithstanding section 692.2, subsection 5, criminal history
12 13 data for any applicant for an initial license issued pursuant
12 14 to this section, any applicant for reinstatement of a license
12 15 issued pursuant to this section, or any licensee who is being
12 16 monitored as a result of a commission order or agreement
12 17 resolving an administrative disciplinary action, for the
12 18 purpose of evaluating the applicant's or licensee's
12 19 eligibility for licensure or suitability for continued
12 20 practice as a sales agent. The commissioner shall adopt rules
12 21 pursuant to chapter 17A to implement this section. The
12 22 commissioner shall inform the applicant or licensee of the
12 23 criminal history requirement and obtain a signed waiver from
12 24 the applicant or licensee prior to submitting a criminal
12 25 history data request.
12 26 b. A request for criminal history data shall be submitted
12 27 to the department of public safety, division of criminal
12 28 investigation, pursuant to section 692.2, subsection 1. The
12 29 commissioner may also require such applicants or licensees, to
12 30 provide a full set of fingerprints, in a form and manner
12 31 prescribed by the commission. Such fingerprints may be
12 32 submitted to the federal bureau of investigation through the
12 33 state criminal history repository for a national criminal
12 34 history check. The commissioner may authorize alternate
12 35 methods or sources for obtaining criminal history record
13 1 information. The commissioner may, in addition to any other
13 2 fees, charge and collect such amounts as may be incurred by
13 3 the commissioner, the department of public safety, or the
13 4 federal bureau of investigation in obtaining criminal history
13 5 information. Amounts collected shall be considered repayment
13 6 receipts as defined in section 8.2.
13 7 c. Criminal history information relating to an applicant
13 8 or licensee obtained by the commissioner pursuant to this
13 9 section is confidential. The commissioner may, however, use
13 10 such information in a license denial proceeding.
13 11 5. An initial permit expires one year from the date the
13 12 application is filed. The permit may be renewed for four
13 13 years by filing the form prescribed by the commissioner under
13 14 subsection 3, accompanied by a twenty dollar filing fee. The
13 15 sales license shall be valid until denied, suspended, revoked,
13 16 or surrendered.
13 17 6. A sales agent licensed pursuant to this section shall
13 18 satisfactorily fulfill continuing education requirements for
13 19 the license as prescribed by the commissioner by rule.
13 20 6. 7. A permit holder sales licensee shall inform the
13 21 commissioner of changes in the information required to be
13 22 provided by subsection 4 in the application within thirty days
13 23 of the change.
13 24 7. 8. A sales permit license is not assignable or
13 25 transferable. An establishment selling all or part of its
13 26 business to a purchaser shall cancel the establishment's sales
13 27 permit. The purchaser shall apply for a new sales permit in
13 28 the purchaser's name within thirty days of the sale.
13 29 8. 9. If no denial order is in effect and no proceeding
13 30 is pending under section 523A.503, the application becomes
13 31 effective at noon of the thirtieth day after a completed
13 32 application or an amendment completing the application is
13 33 filed, unless waived by the applicant. The commissioner may
13 34 specify an earlier effective date. Automatic effectiveness
13 35 under this subsection shall not be deemed approval of the
14 1 application. If the commissioner does not grant the permit
14 2 license, the commissioner shall notify the applicant in
14 3 writing of the reasons for the denial.
14 4 9. 10. The commissioner may by rule create or accept a
14 5 multijurisdiction sales permit license. If the sales permit
14 6 license is issued by another jurisdiction, the rules shall
14 7 require the filing of an application or notice form and
14 8 payment of the applicable filing fee of five dollars for each
14 9 year. The application or notice form utilized and the
14 10 effective dates and terms of the permit license may vary from
14 11 the provisions set forth in subsections 3 and 5.
14 12 Sec. 18. NEW SECTION. 523A.502A SALES AGENT ANNUAL
14 13 REPORTING REQUIREMENTS.
14 14 1. A sales agent shall file with the commissioner not
14 15 later than April 1 of each year an annual report on a form
14 16 prescribed by the commissioner, including a copy of each
14 17 purchase agreement sold by the sales agent during the year.
14 18 2. All records maintained by the commissioner under this
14 19 section shall be confidential pursuant to section 22.7,
14 20 subsection 58, and shall not be made available for inspection
14 21 or copying except upon the approval of the commissioner or the
14 22 attorney general.
14 23 3. The commissioner shall levy an administrative penalty
14 24 in the amount of five hundred dollars against a sales agent
14 25 who fails to file an annual report when due, payable to the
14 26 state for deposit in the general fund.
14 27 4. A sales agent who fails to file the annual report when
14 28 due shall immediately cease soliciting or executing purchase
14 29 agreements until the annual report is filed and any
14 30 administrative penalty assessed has been paid.
14 31 Sec. 19. Section 523A.503, Code 2007, is amended to read
14 32 as follows:
14 33 523A.503 DENIAL, SUSPENSION, REVOCATION, AND SURRENDER OF
14 34 PERMITS LICENSES.
14 35 1. The commissioner may, pursuant to chapter 17A, deny any
15 1 permit license application, or immediately suspend, revoke, or
15 2 otherwise impose disciplinary action related to any permit
15 3 license issued under this chapter section 523A.501 or 523A.502
15 4 for several reasons, including but not limited to:
15 5 a. Committing a fraudulent act, engaging in a fraudulent
15 6 practice, or violating any provision of this chapter or any
15 7 implementing rule or order issued under this chapter.
15 8 b. Violating any other state or federal law applicable to
15 9 the conduct of the applicant's or permit holder's licensee's
15 10 business.
15 11 c. Insolvency or financial condition.
15 12 d. The permit holder licensee, for the purpose of avoiding
15 13 the trust requirement for funeral services, attributes amounts
15 14 paid under the purchase agreement to cemetery merchandise or
15 15 funeral merchandise that is delivered under section 523A.404
15 16 rather than to funeral services sold to the purchaser. The
15 17 sale of funeral services at a lower price when the sale is
15 18 made in conjunction with the sale of cemetery merchandise or
15 19 funeral merchandise to be delivered under section 523A.404
15 20 than the services are regularly and customarily sold for when
15 21 not sold in conjunction with cemetery merchandise or funeral
15 22 merchandise is evidence that the permit holder licensee is
15 23 acting with the purpose of avoiding the trust requirement for
15 24 funeral services under section 523A.201.
15 25 e. Engaging in a deceptive act or practice or deliberately
15 26 misrepresenting or omitting a material fact regarding the sale
15 27 of cemetery merchandise, funeral merchandise, funeral
15 28 services, or a combination thereof under this chapter.
15 29 f. Conviction of a criminal offense involving dishonesty
15 30 or a false statement including but not limited to fraud,
15 31 theft, misappropriation of funds, falsification of documents,
15 32 deceptive acts or practices, or other related offenses.
15 33 g. Inability to provide the cemetery merchandise, funeral
15 34 merchandise, funeral services, or a combination thereof which
15 35 the applicant or permit holder licensee purports to sell.
16 1 h. The applicant or permit holder licensee sells the
16 2 business without filing a prior notice of sale with the
16 3 commissioner. The permit license shall be revoked thirty days
16 4 following such sale.
16 5 i. Selling by a person who is not an employee or agent of
16 6 the applicant or permit holder a licensed sales agent.
16 7 j. The applicant or licensee is named in an order issued
16 8 pursuant to section 523A.807, subsection 3, paragraph "b".
16 9 2. The commissioner may, for good cause shown, suspend any
16 10 permit license for a period not exceeding thirty days, pending
16 11 investigation.
16 12 3. Except as provided in subsection 2, a permit license
16 13 shall not be revoked, suspended, or otherwise be the subject
16 14 of disciplinary action except after notice and hearing under
16 15 chapter 17A.
16 16 4. Any permit holder licensee may surrender a permit
16 17 license by delivering to the commissioner written notice that
16 18 the permit holder licensee surrenders the permit license, but
16 19 the surrender shall not affect the permit holder's licensee's
16 20 civil or criminal liability for acts committed before the
16 21 surrender.
16 22 5. Denial, revocation, suspension, or surrender of a
16 23 permit license does not impair or affect the obligation of any
16 24 preexisting lawful agreement between the permit holder
16 25 licensee and any person.
16 26 6. The commissioner may impose a civil penalty in an
16 27 amount not exceeding ten thousand dollars per violation
16 28 against any person violating this chapter. Each day of a
16 29 continuing violation constitutes a separate offense.
16 30 Sec. 20. NEW SECTION. 523A.504 APPOINTMENT OF SALES
16 31 AGENTS.
16 32 1. A person shall not sell or offer to furnish cemetery
16 33 merchandise, funeral merchandise, funeral services, or a
16 34 combination thereof when performance or delivery may be more
16 35 than one hundred twenty days following initial payment on the
17 1 account except through a sales agent who holds a sales license
17 2 issued pursuant to section 523A.502. If a person holding a
17 3 preneed seller's license appoints a sales agent to act on
17 4 behalf of the preneed seller, the person shall file a notice
17 5 of such appointment with the commissioner within thirty days
17 6 of the appointment, in a format approved by the commissioner,
17 7 and annually thereafter.
17 8 2. A preneed seller shall pay an annual fee of five
17 9 dollars for each sales agent appointed by the preneed seller,
17 10 which fee shall be submitted with the annual report.
17 11 Sec. 21. Section 523A.601, subsection 1, paragraph a, Code
17 12 2007, is amended to read as follows:
17 13 a. Identify the seller preneed seller by name and license
17 14 number, the salesperson's permit and establishment sales agent
17 15 by name and permit license number, the expiration date of the
17 16 salesperson's permit, the purchaser, and the person for whom
17 17 the cemetery merchandise, funeral merchandise, funeral
17 18 services, or a combination thereof is purchased, if other than
17 19 the purchaser.
17 20 Sec. 22. Section 523A.601, Code 2007, is amended by adding
17 21 the following new subsection:
17 22 NEW SUBSECTION. 6. a. A purchase agreement that is
17 23 funded by a trust shall include a conspicuous statement in
17 24 language substantially similar to the following language:
17 25 "For your prearranged funeral agreement, we will deposit
17 26 not less than eighty percent of your payments in trust at
17 27 (name of financial institution), (street address), (city),
17 28 (state) (zip code) within fifteen days following the end of
17 29 the calendar month that we received the funds. For your
17 30 protection, you have the right to contact the financial
17 31 institution directly to confirm that the deposit of these
17 32 funds occurred as required by law. If you are unable to
17 33 confirm the deposit of these funds in trust, you may contact
17 34 the Iowa insurance division for assistance by calling the
17 35 insurance division at (telephone number) or by mail at (street
18 1 address), (city), Iowa (zip code)."
18 2 b. A purchase agreement that is funded with an insurance
18 3 policy or an annuity shall include a conspicuous statement in
18 4 language substantially similar to the following language:
18 5 "If an insurance policy or annuity is not purchased to fund
18 6 your prearranged funeral agreement, it is possible that the
18 7 seller may not be able to deliver on the arrangements
18 8 contained in the agreement due to insufficient funding. An
18 9 (insurance policy or annuity) will be purchased from (name of
18 10 issuer of the policy or annuity), (street address), (city),
18 11 (state) (zip code). You should receive confirmation of the
18 12 purchase of an insurance policy or certificate, or an annuity
18 13 within sixty days of making payment. Delivery of the actual
18 14 insurance policy or certificate or annuity shall also
18 15 constitute confirmation. If you do not receive confirmation
18 16 that an insurance policy or certificate or an annuity has been
18 17 purchased or receive the insurance policy or certificate or
18 18 the annuity, you should report this fact to the Iowa insurance
18 19 division, by calling the insurance division at (telephone
18 20 number). Written reports should be mailed to the Iowa
18 21 insurance division at (street address), (city), Iowa (zip
18 22 code)."
18 23 c. A purchase agreement that is funded with a surety bond
18 24 shall include a conspicuous statement in language
18 25 substantially similar to the following language:
18 26 "If a surety bond is not purchased to fund your prearranged
18 27 funeral agreement, it is possible that the seller may not be
18 28 able to deliver on the arrangements contained in the agreement
18 29 due to insufficient funding. Coverage under a surety bond, in
18 30 the amount of $(amount) will be purchased from (name of issuer
18 31 of surety bond), (street address), (city), (state) (zip code)
18 32 to fund your purchase. If you pay pursuant to your purchase
18 33 agreement with a single payment, you should receive
18 34 confirmation of the purchase of a surety bond within sixty
18 35 days of making the payment. If you pay pursuant to your
19 1 purchase agreement with multiple, periodic payments, you
19 2 should receive confirmation of the purchase of a surety bond
19 3 within sixty days of making the first payment and within sixty
19 4 days of making the last payment pursuant to the agreement. If
19 5 you do not receive confirmation of coverage under a surety
19 6 bond within sixty days of making the first payment and within
19 7 sixty days of making the last payment, you should report this
19 8 fact to the Iowa insurance division, by calling the insurance
19 9 division at (telephone number). Written reports should be
19 10 mailed to the Iowa insurance division at (street address),
19 11 (city), Iowa (zip code)."
19 12 Sec. 23. NEW SECTION. 523A.603 SECURITY AND NOTICE
19 13 REQUIREMENTS.
19 14 1. If a purchase agreement is funded with an insurance
19 15 policy or an annuity, the purchaser shall receive a notice
19 16 thereof from the insurance company within sixty days of making
19 17 payment. The notice shall include the name and address of the
19 18 insurance company, the policy number of the insurance policy
19 19 that secures the agreement, the name of the insured under the
19 20 insurance policy or annuity, and the amount of the accumulated
19 21 death benefit. Delivery of the insurance policy or
19 22 certificate or annuity shall satisfy this notice requirement.
19 23 2. If a purchase agreement is funded by a surety bond, the
19 24 purchaser shall receive a notice from the surety company that
19 25 evidences coverage under the bond, the name of the purchaser
19 26 or beneficiary, and the amount of coverage. If the purchase
19 27 agreement is paid with a single payment, the purchaser shall
19 28 receive notice of the surety bond within sixty days of making
19 29 the payment. If the purchase agreement is being paid with
19 30 multiple, periodic payments, the purchaser shall receive
19 31 notice of the surety bond within sixty days of making the last
19 32 payment. Compliance with this notice requirement does not
19 33 require a seller to purchase individual surety bonds for each
19 34 purchaser and beneficiary. A seller may file a single bond
19 35 with the commissioner.
20 1 Sec. 24. NEW SECTION. 523A.604 PURCHASE AGREEMENTS ==
20 2 NUMBERING.
20 3 Purchase agreements for cemetery merchandise, funeral
20 4 merchandise, funeral services, or a combination thereof shall
20 5 be sequentially numbered by each seller in compliance with
20 6 procedures specified by the commissioner by rules adopted
20 7 under chapter 17A.
20 8 Sec. 25. Section 523A.703, subsection 5, Code 2007, is
20 9 amended to read as follows:
20 10 5. Knowingly sells or offers cemetery merchandise, funeral
20 11 merchandise, funeral services, or a combination thereof
20 12 without an establishment permit a preneed seller's license or
20 13 a sales agent license.
20 14 Sec. 26. NEW SECTION. 523A.704 VIOLATIONS.
20 15 A person who willfully violates the provisions of section
20 16 523A.201, 523A.202, 523A.401, 523A.402, 523A.403, 523A.404,
20 17 523A.405, 523A.501, or 523A.502 of this chapter or any rules
20 18 adopted pursuant thereto is guilty of a class "D" felony.
20 19 Sec. 27. Section 523A.801, subsection 1, Code 2007, is
20 20 amended to read as follows:
20 21 1. This chapter shall be administered by the commissioner.
20 22 The deputy administrator appointed pursuant to section 502.601
20 23 shall be the principal operations officer responsible to the
20 24 commissioner for the routine administration of this chapter
20 25 and management of the administrative staff. In the absence of
20 26 the commissioner, whether because of vacancy in the office due
20 27 to absence, physical disability, or other cause, the deputy
20 28 administrator shall, for the time being, have and exercise the
20 29 authority conferred upon the commissioner. The commissioner
20 30 may by order from time to time delegate to the deputy
20 31 administrator any or all of the functions assigned to the
20 32 commissioner in this chapter. The deputy administrator shall
20 33 employ officers, attorneys, accountants, and other employees
20 34 as needed for administering this chapter.
20 35 Sec. 28. Section 523A.807, Code 2007, is amended by adding
21 1 the following new subsections:
21 2 NEW SUBSECTION. 3. If the commissioner finds that a
21 3 person has violated section 523A.201, 523A.202, 523A.401,
21 4 523A.402, 523A.403, 523A.404, 523A.405, 523A.501, or 523A.502
21 5 or any rule adopted pursuant thereto, the commissioner may
21 6 order any or all of the following:
21 7 a. Payment of a civil penalty of not more than one
21 8 thousand dollars for each violation, but not exceeding an
21 9 aggregate of ten thousand dollars during any six=month period,
21 10 except that if the commissioner finds that the person knew or
21 11 reasonably should have known that the person was in violation
21 12 of such provisions or rules adopted thereto, the penalty shall
21 13 be not more than five thousand dollars for each violation, but
21 14 not exceeding an aggregate of fifty thousand dollars during
21 15 any six=month period. The commissioner shall assess the
21 16 penalty on the employer of an individual and not on the
21 17 individual, if the commissioner finds that the violations
21 18 committed by the individual were directed, encouraged,
21 19 condoned, ignored, or ratified by the individual's employer.
21 20 b. Issuance of an order prohibiting the person committing
21 21 a violation from selling funeral merchandise, cemetery
21 22 merchandise, funeral services, or a combination thereof, and
21 23 from managing, operating, or otherwise exercising control over
21 24 any business entity that is subject to regulation under this
21 25 chapter or chapter 523I. A person who has been named in such
21 26 an order may contest the order by filing a request for a
21 27 contested case proceeding as provided in chapter 17A and in
21 28 accordance with rules adopted by the commissioner. The
21 29 commissioner may, pursuant to chapter 17A, deny any
21 30 application filed under section 523A.501 or 523A.502 if the
21 31 applicant, or an officer, director, or owner of the applicant
21 32 is named in a final order issued pursuant to this subsection.
21 33 NEW SUBSECTION. 4. The commissioner shall post on the
21 34 website of the division of insurance of the department of
21 35 commerce a list of all persons licensed under chapter 523A and
22 1 an index of orders issued by the commissioner pertaining to
22 2 such persons.
22 3 Sec. 29. Section 523A.811, subsection 1, Code 2007, is
22 4 amended by adding the following new paragraph:
22 5 NEW PARAGRAPH. f. A receivership has been established for
22 6 a cemetery subject to chapter 523I that is owned or operated
22 7 by a seller who is subject to this chapter.
22 8 Sec. 30. Section 523A.811, Code 2007, is amended by adding
22 9 the following new subsection:
22 10 NEW SUBSECTION. 3. If a seller who is subject to this
22 11 chapter owns or operates a cemetery subject to chapter 523I,
22 12 for which a receivership has been established, the
22 13 receivership provisions of section 523I.212 shall apply to any
22 14 receivership established under this section.
22 15 Sec. 31. Section 523A.812, Code 2007, is amended to read
22 16 as follows:
22 17 523A.812 INSURANCE DIVISION REGULATORY FUND.
22 18 The insurance division may authorize the creation of a
22 19 special revenue fund in the state treasury, to be known as the
22 20 insurance division regulatory fund. The commissioner shall
22 21 allocate annually from the fees paid pursuant to section
22 22 523A.204, two dollars for each purchase agreement reported on
22 23 an establishment permit holder's a preneed seller's annual
22 24 report filed pursuant to section 523A.204 for deposit to the
22 25 regulatory fund. The remainder of the fees collected pursuant
22 26 to section 523A.204 shall be deposited into the general fund
22 27 of the state. The commissioner shall also allocate annually
22 28 the audit examination fees paid pursuant to section 523A.814
22 29 and any examination expense reimbursement for deposit to the
22 30 regulatory fund. The moneys in the regulatory fund shall be
22 31 retained in the fund. The moneys are appropriated and,
22 32 subject to authorization by the commissioner, may be used to
22 33 pay auditors, audit examiners, examination expenses,
22 34 investigative expenses, the expenses of mediation ordered by
22 35 the commissioner, consumer education expenses, the expenses of
23 1 a toll=free telephone line to receive consumer complaints, and
23 2 the expenses of receiverships established under section
23 3 523A.811. If the commissioner determines that funding is not
23 4 otherwise available to reimburse the expenses of a person who
23 5 receives title to a cemetery subject to chapter 523I, pursuant
23 6 to such a receivership, the commissioner shall use moneys in
23 7 the regulatory fund as necessary to preserve, protect,
23 8 restore, and maintain the physical integrity of that cemetery
23 9 and to satisfy claims or demands for cemetery merchandise,
23 10 funeral merchandise, and funeral services based on purchase
23 11 agreements which the commissioner determines are just and
23 12 outstanding. An annual allocation to the regulatory fund
23 13 shall not be imposed if the current balance of the fund
23 14 exceeds two five hundred thousand dollars.
23 15 Sec. 32. Section 523A.814, Code 2007, is amended to read
23 16 as follows:
23 17 523A.814 AUDIT EXAMINATION FEE.
23 18 In addition to the filing fee paid pursuant to section
23 19 523A.204, subsection 5 2, an establishment a seller filing an
23 20 annual report shall pay an audit examination fee in the amount
23 21 of five dollars for each purchase agreement subject to a
23 22 filing fee that is sold between July 1, 2005, and December 31,
23 23 2007, and in the amount of ten dollars for each purchase
23 24 agreement subject to a filing fee that is sold after December
23 25 31, 2007.
23 26 Sec. 33. Section 523I.102, subsections 3 and 8, Code 2007,
23 27 are amended to read as follows:
23 28 3. "Capital gains" means appreciation in the value of
23 29 trust assets for which a market value may be determined with
23 30 reasonable certainty after deduction of investment losses,
23 31 taxes, expenses incurred in the sale of trust assets, any
23 32 costs of the operation of the trust, examination expenses, and
23 33 any annual audit fees expenses.
23 34 8. "Commissioner" means the commissioner of insurance or
23 35 the deputy administrator authorized in section 523A.801 to the
24 1 extent the commissioner delegates functions to the deputy
24 2 administrator commissioner's designee authorized in section
24 3 523A.801.
24 4 Sec. 34. Section 523I.102, subsection 17, unnumbered
24 5 paragraph 1, Code 2007, is amended to read as follows:
24 6 "Income" means the return in money or property derived from
24 7 the use of trust principal after deduction of investment
24 8 losses, taxes, and expenses incurred in the sale of trust
24 9 assets, any cost of the operation of the trust, examination
24 10 expenses or fees, and any annual audit fees expenses.
24 11 "Income" includes but is not limited to:
24 12 Sec. 35. Section 523I.201, subsection 1, Code 2007, is
24 13 amended to read as follows:
24 14 1. This chapter shall be administered by the commissioner.
24 15 The deputy administrator appointed pursuant to section 502.601
24 16 shall be the principal operations officer responsible to the
24 17 commissioner for the routine administration of this chapter
24 18 and management of the administrative staff. In the absence of
24 19 the commissioner, whether because of vacancy in the office due
24 20 to absence, physical disability, or other cause, the deputy
24 21 administrator shall, for the time being, have and exercise the
24 22 authority conferred upon the commissioner. The commissioner
24 23 may by order from time to time delegate to the deputy
24 24 administrator any or all of the functions assigned to the
24 25 commissioner in this chapter. The deputy administrator shall
24 26 employ officers, attorneys, accountants, and other employees
24 27 as needed for administering this chapter.
24 28 Sec. 36. Section 523I.212, subsection 1, Code 2007, is
24 29 amended by adding the following new paragraph:
24 30 NEW PARAGRAPH. d. A receivership has been established for
24 31 a seller subject to chapter 523A who owns or operates a
24 32 cemetery that is subject to this chapter.
24 33 Sec. 37. Section 523I.212, subsection 2, Code 2007, is
24 34 amended to read as follows:
24 35 2. The commissioner or attorney general may apply to the
25 1 district court in any county of the state for the
25 2 establishment of a receivership. Upon proof that any of the
25 3 conditions described in this section have occurred, the court
25 4 may grant a receivership. The commissioner may request that
25 5 the insurance division be named as a receiver or that the
25 6 court appoint a third party as a receiver. If the division is
25 7 appointed as a receiver, the division shall not be subject to
25 8 the requirements concerning an oath and surety bond contained
25 9 in section 680.3.
25 10 Sec. 38. Section 523I.212, Code 2007, is amended by adding
25 11 the following new subsections:
25 12 NEW SUBSECTION. 3. In addition to the powers granted to
25 13 receivers under chapter 680, a receiver appointed under this
25 14 section shall be granted all powers necessary to locate and to
25 15 temporarily preserve and protect perpetual care trust funds,
25 16 consumer and business assets, interment records, records of
25 17 consumer purchases of interment rights, and records of
25 18 consumer purchases of funeral services and funeral or cemetery
25 19 merchandise as defined in chapter 523A. The receiver shall
25 20 also be granted such powers as are necessary in the course of
25 21 the receivership to temporarily preserve and protect a
25 22 cemetery or burial site and to temporarily restore or sustain
25 23 cemetery operations, including interments, as operating funds
25 24 or trust funds become available.
25 25 NEW SUBSECTION. 4. The commissioner may petition the
25 26 court to terminate a receivership at any time and to enter
25 27 such orders as are necessary to transfer the duty to preserve
25 28 and protect the physical integrity of the cemetery or burial
25 29 site, the interment records, and other records documenting
25 30 consumer purchases of interment rights to the applicable
25 31 governmental subdivision, as provided in section 523I.316,
25 32 subsection 3. The court shall grant the petition if following
25 33 the first one hundred twenty days of the receivership such
25 34 duty to preserve and protect cannot be reasonably assumed by a
25 35 private entity, association, or by other means.
26 1 Sec. 39. Section 523I.213, Code 2007, is amended to read
26 2 as follows:
26 3 523I.213 INSURANCE DIVISION'S ENFORCEMENT FUND.
26 4 A special revenue fund in the state treasury, to be known
26 5 as the insurance division's enforcement fund, is created under
26 6 the authority of the commissioner. The commissioner shall
26 7 allocate annually from the audit examination fees paid
26 8 pursuant to section 523I.808, an amount not exceeding fifty
26 9 thousand dollars, for deposit to the insurance division's
26 10 enforcement fund. The moneys in the enforcement fund shall be
26 11 retained in the fund. The moneys are appropriated and,
26 12 subject to authorization by the commissioner, shall be used to
26 13 pay auditors, audit examiners, examination expenses,
26 14 investigative expenses, the expenses of consumer education,
26 15 compliance, and education programs for filers and other
26 16 regulated persons, and educational or compliance program
26 17 materials, the expenses of a toll=free telephone line for
26 18 consumer complaints, and the expenses of receiverships of
26 19 perpetual care cemeteries established under section 523I.212.
26 20 Sec. 40. NEW SECTION. 523I.213A EXAMINATIONS ==
26 21 AUTHORITY AND SCOPE.
26 22 1. The commissioner or the commissioner's designee may
26 23 conduct an examination under this chapter of any cemetery as
26 24 often as the commissioner deems appropriate. If a cemetery
26 25 has a trust arrangement, the commissioner shall conduct an
26 26 examination not less than once every five years.
26 27 2. A cemetery shall reimburse the division for the expense
26 28 of conducting the examination unless the commissioner waives
26 29 this requirement. The expense of an examination involving
26 30 multiple cemeteries or other persons shall be prorated among
26 31 them upon any reasonable basis as determined by the
26 32 commissioner.
26 33 3. For purposes of completing an examination pursuant to
26 34 this chapter, the commissioner may examine or investigate any
26 35 person, or the business of any person, if the examination or
27 1 investigation is, in the sole discretion of the commissioner,
27 2 necessary or material to the examination of the cemetery.
27 3 4. Upon determining that an examination should be
27 4 conducted, the commissioner or the commissioner's designee may
27 5 appoint one or more examiners to perform the examination and
27 6 instruct them as to the scope of the examination.
27 7 5. A cemetery or person from whom information is sought,
27 8 and its officers, directors, and agents shall provide to the
27 9 examiners appointed under subsection 4, timely, convenient,
27 10 and free access at their offices, at all reasonable hours, to
27 11 all books, records, accounts, papers, documents, and all
27 12 electronic or other recordings related to the property,
27 13 assets, business, and affairs of the cemetery being examined
27 14 and shall facilitate the examination as much as possible. If
27 15 a cemetery, by its officers, directors, employees, or agents,
27 16 refuses to submit to an examination as provided in this
27 17 chapter, the commissioner shall immediately report the refusal
27 18 to the attorney general, who shall then immediately apply to
27 19 district court for the appointment of a receiver to administer
27 20 the final affairs of the cemetery.
27 21 6. This section shall not be construed to limit the
27 22 commissioner's authority to terminate or suspend any
27 23 examination in order to pursue other legal or regulatory
27 24 actions pursuant to this chapter. Findings of fact and
27 25 conclusions made pursuant to an examination are deemed to be
27 26 prima facie evidence in any legal or regulatory action.
27 27 Sec. 41. NEW SECTION. 523I.213B VENUE.
27 28 All actions relating to the enforcement of this chapter
27 29 shall be governed by the laws of the state of Iowa. Venue of
27 30 any action relating to enforcement of this chapter may be in a
27 31 court of competent jurisdiction in Polk county, at the
27 32 discretion of the commissioner.
27 33 Sec. 42. Section 523I.305, subsection 3, Code 2007, is
27 34 amended to read as follows:
27 35 3. SPECIFICATIONS. Upon request, a cemetery shall provide
28 1 reasonable written specifications and instructions governing
28 2 installation of memorials, which shall apply to all
28 3 installations whether performed by the cemetery or another
28 4 person. The written specifications shall include provisions
28 5 governing hours of installation or any other relevant
28 6 administrative requirements of the cemetery. A copy of these
28 7 specifications and instructions shall be provided upon
28 8 request, without charge, to the owner of the interment space,
28 9 next of kin, or a personal representative or agent of the
28 10 owner, including the person installing the memorial. The
28 11 person installing the memorial shall comply with the
28 12 cemetery's written installation specifications and
28 13 instructions. In order to verify that a memorial is installed
28 14 on the proper interment space in accordance with cemetery
28 15 rules and regulations, the cemetery shall mark the place on
28 16 the interment space where the memorial is to be installed and
28 17 shall inspect the installation when completed. This
28 18 subsection shall not be construed to require that a cemetery
28 19 lay out or engineer an interment space for the installation of
28 20 a memorial. A cemetery shall not adopt or enforce any rule
28 21 prohibiting the installation of a memorial by a memorial
28 22 dealer or independent third party, unless the rule is adopted
28 23 applicable to all memorials from whatever source obtained and
28 24 enforced uniformly for all memorials installed in the
28 25 cemetery.
28 26 Sec. 43. NEW SECTION. 523I.314A STANDARDS FOR INTERMENT
28 27 SPACES.
28 28 1. A standard interment space for full body interment
28 29 developed on or after July 1, 2007, shall measure at least
28 30 forty inches in width and ninety=six inches in length.
28 31 2. Prior to the sale of interment rights in an undeveloped
28 32 area of a cemetery, internal reference markers shall be
28 33 installed and maintained no more than one hundred feet apart.
28 34 The internal reference markers shall be established with
28 35 reference to survey markers that are no more than two hundred
29 1 feet apart, have been set by a surveyor and mapper, and have
29 2 been documented in a land survey. Both the map and the land
29 3 survey shall be maintained by the cemetery and made available
29 4 upon request to the commissioner and to members of the public.
29 5 Sec. 44. Section 523I.808, Code 2007, is amended to read
29 6 as follows:
29 7 523I.808 AUDIT EXAMINATION FEE.
29 8 An audit examination fee shall be submitted with the
29 9 cemetery's annual report in an amount equal to five dollars
29 10 for each certificate of interment rights issued during the
29 11 fiscal year covered by the report. The cemetery may charge
29 12 the audit examination fee directly to the purchaser of the
29 13 interment rights.
29 14 Sec. 45. Section 523I.810, subsection 9, Code 2007, is
29 15 amended to read as follows:
29 16 9. A cemetery may, by resolution adopted by a vote of at
29 17 least two=thirds of the members of its board at any authorized
29 18 meeting of the board, authorize the withdrawal and use of not
29 19 more than twenty percent of the principal of the care fund to
29 20 acquire additional land for cemetery purposes, to repair a
29 21 mausoleum or other building or structure intended for cemetery
29 22 purposes, or to build, improve, or repair roads and walkways
29 23 in the cemetery, or to purchase recordkeeping software used to
29 24 maintain ownership records or interment records. The
29 25 resolution shall establish a reasonable repayment schedule,
29 26 not to exceed five years, and provide for interest in an
29 27 amount comparable to the care fund's current rate of return on
29 28 its investments. However, the care fund shall not be
29 29 diminished below an amount equal to the greater of twenty=five
29 30 thousand dollars or five thousand dollars per acre of land in
29 31 the cemetery. The resolution, and either a bond or proof of
29 32 insurance to guarantee replenishment of the care fund, shall
29 33 be filed with the commissioner thirty days prior to the
29 34 withdrawal of funds.
29 35 Sec. 46. Section 523I.813, subsection 1, Code 2007, is
30 1 amended by striking the subsection and inserting in lieu
30 2 thereof the following:
30 3 1. A perpetual care cemetery shall file an annual report
30 4 at the end of each fiscal year of the cemetery.
30 5 Sec. 47. Section 523I.813, Code 2007, is amended by adding
30 6 the following new subsection:
30 7 NEW SUBSECTION. 3. The commissioner shall levy an
30 8 administrative penalty in the amount of five hundred dollars
30 9 against a cemetery that fails to file the annual report when
30 10 due, payable to the state for deposit in the general fund of
30 11 the state.
30 12 DIVISION II
30 13 COORDINATING AMENDMENTS
30 14 Sec. 48. Section 523A.102, subsection 9, paragraphs b and
30 15 c, Code 2007, are amended to read as follows:
30 16 b. If authorized by a purchaser under a purchase
30 17 agreement, cemetery merchandise has been permanently
30 18 identified with the name of the purchaser or the beneficiary
30 19 and delivered to a bonded warehouse or storage facility
30 20 approved by the commissioner and both title to the merchandise
30 21 and a warehouse receipt have been delivered to the purchaser
30 22 or beneficiary and a copy of the warehouse receipt has been
30 23 delivered to the establishment seller for retention in its
30 24 files.
30 25 c. If authorized by a purchaser under a purchase
30 26 agreement, a polystyrene or polypropylene outer burial
30 27 container has been permanently identified with the name of the
30 28 purchaser or the beneficiary and delivered to a bonded
30 29 warehouse or storage facility approved by the commissioner and
30 30 both title to the merchandise and a warehouse receipt have
30 31 been delivered to the purchaser or beneficiary and a copy of
30 32 the warehouse receipt has been delivered to the establishment
30 33 seller for retention in its files.
30 34 Sec. 49. Section 523A.102, subsection 21, Code 2007, is
30 35 amended to read as follows:
31 1 21. "Parent company" means a corporation that has a
31 2 controlling interest in an establishment a seller.
31 3 Sec. 50. Section 523A.205, subsection 1, Code 2007, is
31 4 amended to read as follows:
31 5 1. A financial institution shall file with the
31 6 commissioner not later than March 1 of each year an annual
31 7 report on a form prescribed by the commissioner showing all
31 8 funds deposited by an establishment a seller under a trust
31 9 agreement during the previous year. Each report shall contain
31 10 all information requested.
31 11 Sec. 51. Section 523A.401, subsection 5, paragraphs a and
31 12 b, Code 2007, are amended to read as follows:
31 13 a. Except as necessary and appropriate to satisfy the
31 14 requirements regarding burial trust funds under Title XIX of
31 15 the federal Social Security Act, the policy shall not be owned
31 16 by the establishment seller, the policy shall not be
31 17 irrevocably assigned to the establishment seller, and the
31 18 assignment of proceeds from the insurance policy to the
31 19 establishment seller shall be limited to the establishment's
31 20 seller's interests as they appear in the purchase agreement,
31 21 and conditioned on the establishment's seller's delivery of
31 22 cemetery merchandise, funeral merchandise, and funeral
31 23 services pursuant to a purchase agreement.
31 24 b. The policy shall provide that any assignment of
31 25 benefits is contingent upon the establishment's seller's
31 26 delivery of cemetery merchandise, funeral merchandise, and
31 27 funeral services pursuant to a purchase agreement.
31 28 Sec. 52. Section 523A.401, subsection 6, unnumbered
31 29 paragraph 1, Code 2007, is amended to read as follows:
31 30 With the written consent of the purchaser, an existing
31 31 prepaid purchase agreement with trust=funded benefits may be
31 32 converted to a prepaid purchase agreement with
31 33 insurance=funded benefits provided the establishment seller
31 34 and the insurance benefits comply with the following
31 35 provisions:
32 1 Sec. 53. Section 523A.401, subsection 6, paragraph d, Code
32 2 2007, is amended to read as follows:
32 3 d. The establishment seller shall maintain a copy of any
32 4 prepaid trust=funded purchase agreement that was converted to
32 5 a prepaid insurance=funded purchase agreement and retain the
32 6 payment history records for each converted purchase agreement
32 7 prior to conversion until the cemetery merchandise, funeral
32 8 merchandise, and funeral services have been delivered.
32 9 Sec. 54. Section 523A.401, subsection 8, Code 2007, is
32 10 amended to read as follows:
32 11 8. An insurance company issuing policies funding purchase
32 12 agreements subject to this chapter shall file an annual report
32 13 with the commissioner on a form prescribed by the
32 14 commissioner. The report shall list the applicable insurance
32 15 policies outstanding for each establishment seller. Computer
32 16 printouts may be submitted so long as each legibly provides
32 17 the same information required in the prescribed form.
32 18 Sec. 55. Section 523A.402, subsection 5, paragraphs a and
32 19 b, Code 2007, are amended to read as follows:
32 20 a. Except as necessary and appropriate to satisfy the
32 21 requirements regarding burial trust funds under Title XIX of
32 22 the federal Social Security Act, the annuity shall not be
32 23 owned by the establishment seller or irrevocably assigned to
32 24 the establishment seller and any designation of the
32 25 establishment seller as a beneficiary shall not be made
32 26 irrevocable.
32 27 b. The annuity shall provide that any assignment of
32 28 benefits is contingent upon the establishment's seller's
32 29 delivery of cemetery merchandise, funeral merchandise, and
32 30 funeral services pursuant to a purchase agreement.
32 31 Sec. 56. Section 523A.402, subsection 6, unnumbered
32 32 paragraph 1, Code 2007, is amended to read as follows:
32 33 With the written consent of the purchaser, an existing
32 34 prepaid purchase agreement with trust=funded benefits may be
32 35 converted to a prepaid purchase agreement with annuity=funded
33 1 benefits provided the establishment seller and the annuity
33 2 benefits comply with the following provisions:
33 3 Sec. 57. Section 523A.402, subsection 6, paragraph d, Code
33 4 2007, is amended to read as follows:
33 5 d. The establishment seller shall maintain a copy of any
33 6 prepaid trust=funded purchase agreement that was converted to
33 7 a prepaid annuity=funded purchase agreement and retain the
33 8 payment history records for each converted purchase agreement
33 9 prior to conversion until the cemetery merchandise, funeral
33 10 merchandise, and funeral services have been delivered.
33 11 Sec. 58. Section 523A.402, subsection 8, Code 2007, is
33 12 amended to read as follows:
33 13 8. An insurance company issuing annuities funding purchase
33 14 agreements subject to this chapter shall file an annual report
33 15 with the commissioner on a form prescribed by the
33 16 commissioner. The report shall list the applicable annuities
33 17 outstanding for each establishment seller. Computer printouts
33 18 may be submitted so long as each legibly provides the same
33 19 information required in the prescribed form.
33 20 Sec. 59. Section 523A.404, subsection 4, Code 2007, is
33 21 amended to read as follows:
33 22 4. An establishment A seller is prohibited from requiring
33 23 delivery as a condition of the sale.
33 24 Sec. 60. Section 523A.405, subsection 9, unnumbered
33 25 paragraph 1, Code 2007, is amended to read as follows:
33 26 With the consent of the purchaser, an existing prepaid
33 27 purchase agreement with trust=funded benefits may be converted
33 28 to a prepaid purchase agreement funded by a surety bond
33 29 provided the establishment seller and the surety bond comply
33 30 with the following provisions:
33 31 Sec. 61. Section 523A.405, subsection 9, paragraph c, Code
33 32 2007, is amended to read as follows:
33 33 c. The establishment seller shall maintain a copy of any
33 34 prepaid trust=funded agreement that was converted to a prepaid
33 35 purchase agreement funded by a surety bond and retain the
34 1 payment history records for each converted purchase agreement
34 2 prior to conversion until the cemetery merchandise, funeral
34 3 merchandise, and funeral services have been delivered.
34 4 Sec. 62. Section 523A.601, subsection 2, paragraph e, Code
34 5 2007, is amended to read as follows:
34 6 e. State clearly that the purchaser is entitled to
34 7 transfer the trust funding, insurance funding, or other trust
34 8 assets or select another establishment seller to receive the
34 9 trust funding, insurance funding, or any other trust assets.
34 10 Sec. 63. Section 523A.601, subsection 5, paragraph h, Code
34 11 2007, is amended to read as follows:
34 12 h. If the funding is being transferred from another
34 13 establishment seller, any material facts related to the
34 14 revocation of the prior purchase agreement and the transfer of
34 15 the existing trust funds.
34 16 Sec. 64. Section 523A.602, subsection 2, paragraph b,
34 17 subparagraphs (1) and (2), Code 2007, are amended to read as
34 18 follows:
34 19 (1) If a purchase agreement is canceled, a purchaser
34 20 requests a transfer of the trust assets upon cancellation of a
34 21 purchase agreement, or another establishment seller provides
34 22 merchandise or services designated in a purchase agreement,
34 23 the seller shall refund or transfer within thirty days of
34 24 receiving a written demand no less than the purchase price of
34 25 the applicable cemetery merchandise, funeral merchandise, and
34 26 funeral services adjusted for inflation, using the consumer
34 27 price index amounts announced by the commissioner annually,
34 28 less any actual expenses incurred by the seller pursuant to
34 29 the purchase agreement as set forth in the purchase agreement
34 30 under section 523A.601, subsection 1, paragraph "f". The
34 31 amount of the actual expenses deducted by the seller shall not
34 32 exceed ten percent of the purchase price of the applicable
34 33 cemetery merchandise, funeral merchandise, and funeral
34 34 services. The seller may also deduct the value of the
34 35 cemetery merchandise, funeral merchandise, and funeral
35 1 services already received by, delivered to, or warehoused for
35 2 the purchaser.
35 3 (2) If a purchase agreement is canceled before the
35 4 purchase price is paid in full, a purchaser requests a
35 5 transfer of the trust assets upon cancellation of a purchase
35 6 agreement before the purchase price is paid in full, or
35 7 another establishment seller provides cemetery merchandise,
35 8 funeral merchandise, funeral services, or a combination
35 9 thereof, designated in a purchase agreement before the
35 10 purchase price is paid in full, the seller shall refund or
35 11 transfer within thirty days of receiving a written demand no
35 12 less than the amount paid by the purchaser, less any actual
35 13 expenses incurred by the seller pursuant to the purchase
35 14 agreement as set forth in the purchase agreement under section
35 15 523A.601, subsection 1, paragraph "f". The amount of the
35 16 actual expenses deducted by the seller shall not exceed ten
35 17 percent of the total original purchase price of the applicable
35 18 cemetery merchandise, funeral merchandise, funeral services,
35 19 or a combination thereof. The seller may also deduct the
35 20 value of the cemetery merchandise, funeral merchandise, and
35 21 funeral services already received by, delivered to, or
35 22 warehoused for the purchaser.
35 23 Sec. 65. Section 523A.602, subsection 2, paragraph b,
35 24 subparagraph (3), unnumbered paragraph 1, Code 2007, is
35 25 amended to read as follows:
35 26 For the purposes of this paragraph "b", "actual expenses"
35 27 means all reasonable business expenses of an establishment a
35 28 seller that are associated with the sale of cemetery
35 29 merchandise, funeral merchandise, funeral services, or a
35 30 combination thereof. "Actual expenses" includes but is not
35 31 limited to the following:
35 32 Sec. 66. Section 523A.602, subsection 2, paragraph b,
35 33 subparagraph (3), subparagraph subdivisions (d) and (g), Code
35 34 2007, are amended to read as follows:
35 35 (d) Licensing fees of the establishment seller.
36 1 (g) Expenses related to employees of the establishment
36 2 seller such as licensing fees, continuing education, and
36 3 salaries and commissions.
36 4 Sec. 67. Section 523A.802, subsection 1, Code 2007, is
36 5 amended to read as follows:
36 6 1. This chapter applies to any advertisement, sale,
36 7 promotion, or offer made by a person to furnish, upon the
36 8 future death of a person named or implied in a purchase
36 9 agreement, cemetery merchandise, funeral merchandise, funeral
36 10 services, or a combination thereof. Burial accounts and
36 11 insurance policies are included if the account records or
36 12 related documents identify the establishment seller that will
36 13 provide the cemetery merchandise, funeral merchandise, funeral
36 14 services, or a combination thereof.
36 15 Sec. 68. Section 523A.803, subsection 1, paragraph d, Code
36 16 2007, is amended to read as follows:
36 17 d. Investigate the establishment seller and examine the
36 18 books, accounts, papers, correspondence, memoranda, purchase
36 19 agreements, files, or other documents or records used by every
36 20 applicant and permit holder licensee under this chapter.
36 21 Sec. 69. Section 523A.804, unnumbered paragraph 1, Code
36 22 2007, is amended to read as follows:
36 23 The commissioner may order an establishment a seller to
36 24 participate in mediation in any dispute regarding a purchase
36 25 agreement. Mediation performed under this section shall be
36 26 conducted by a mediator appointed by the commissioner and
36 27 shall comply with the provisions of chapter 679C.
36 28 Sec. 70. Section 523A.806, subsection 2, Code 2007, is
36 29 amended to read as follows:
36 30 2. Revocation or suspension of any permit license issued
36 31 under this chapter.
36 32 Sec. 71. Section 523A.901, subsection 1, Code 2007, is
36 33 amended to read as follows:
36 34 1. GROUNDS FOR LIQUIDATION. The commissioner may petition
36 35 the district court for an order directing the commissioner to
37 1 liquidate an establishment the business of a seller on either
37 2 of the following grounds:
37 3 a. The establishment seller did not deposit funds pursuant
37 4 to section 523A.201 or withdrew funds in a manner inconsistent
37 5 with this chapter and is insolvent.
37 6 b. The establishment seller did not deposit funds pursuant
37 7 to section 523A.201 or withdrew funds in a manner inconsistent
37 8 with this chapter and the condition of the establishment
37 9 seller is such that further transaction of business would be
37 10 hazardous, financially or otherwise, to purchasers or the
37 11 public.
37 12 Sec. 72. Section 523A.901, subsection 2, paragraphs a, b,
37 13 c, and e, Code 2007, are amended to read as follows:
37 14 a. An order to liquidate the business of an establishment
37 15 a seller shall appoint the commissioner as liquidator and
37 16 shall direct the liquidator to immediately take possession of
37 17 the assets of the establishment seller and to administer them
37 18 under the general supervision of the court. The liquidator is
37 19 vested with the title to the property, contracts, and rights
37 20 of action and the books and records of the establishment
37 21 seller ordered liquidated, wherever located, as of the entry
37 22 of the final order of liquidation. The filing or recording of
37 23 the order with the clerk of court and the recorder of deeds of
37 24 the county in which its principal office or place of business
37 25 is located, or in the case of real estate, with the recorder
37 26 of deeds of the county where the property is located, is
37 27 notice as a deed, bill of sale, or other evidence of title
37 28 duly filed or recorded with the recorder of deeds.
37 29 b. Upon issuance of an order, the rights and liabilities
37 30 of an establishment a seller and of the establishment's
37 31 seller's creditors, purchasers, owners, and other persons
37 32 interested in the establishment's seller's estate shall become
37 33 fixed as of the date of the entry of the order of liquidation,
37 34 except as provided in subsection 14.
37 35 c. At the time of petitioning for an order of liquidation,
38 1 or at any time after the time of petitioning, the
38 2 commissioner, after making appropriate findings of an
38 3 establishment's a seller's insolvency, may petition the court
38 4 for a declaration of insolvency. After providing notice and
38 5 hearing as it deems proper, the court may make the
38 6 declaration.
38 7 e. Within five days after the initiation of an appeal of
38 8 an order of liquidation, which order has not been stayed, the
38 9 commissioner shall present for the court's approval a plan for
38 10 the continued performance of the establishment's seller's
38 11 obligations during the pendency of an appeal. The plan shall
38 12 provide for the continued performance of purchase agreements
38 13 in the normal course of events, notwithstanding the grounds
38 14 alleged in support of the order of liquidation including the
38 15 ground of insolvency. If the defendant establishment's
38 16 seller's financial condition, in the judgment of the
38 17 commissioner, will not support the full performance of all
38 18 obligations during the appeal pendency period, the plan may
38 19 prefer the claims of certain purchasers and claimants over
38 20 creditors and interested parties as well as other purchasers
38 21 and claimants, as the commissioner finds to be fair and
38 22 equitable considering the relative circumstances of such
38 23 purchasers and claimants. The court shall examine the plan
38 24 submitted by the commissioner and if it finds the plan to be
38 25 in the best interests of the parties, the court shall approve
38 26 the plan. An action shall not lie against the commissioner or
38 27 any of the commissioner's deputies, agents, clerks,
38 28 assistants, or attorneys by any party based on preference in
38 29 an appeal pendency plan approved by the court.
38 30 Sec. 73. Section 523A.901, subsection 3, paragraph a,
38 31 subparagraphs (4), (6), (7), (8), (9), (10), (11), (12), (13),
38 32 (14), (17), and (18), Code 2007, are amended to read as
38 33 follows:
38 34 (4) Pay reasonable compensation to persons appointed and
38 35 defray from the funds or assets of the establishment seller
39 1 all expenses of taking possession of, conserving, conducting,
39 2 liquidating, disposing of, or otherwise dealing with the
39 3 business and property of the establishment seller. If the
39 4 property of the establishment seller does not contain
39 5 sufficient cash or liquid assets to defray the costs incurred,
39 6 the commissioner may advance the costs so incurred out of the
39 7 insurance division regulatory fund. Amounts so advanced for
39 8 expenses of administration shall be repaid to the insurance
39 9 division regulatory fund for the use of the division out of
39 10 the first available moneys of the establishment seller.
39 11 (6) Collect debts and moneys due and claims belonging to
39 12 the establishment seller, wherever located. Pursuant to this
39 13 subparagraph, the liquidator may do any of the following:
39 14 (a) Institute timely action in other jurisdictions to
39 15 forestall garnishment and attachment proceedings against
39 16 debts.
39 17 (b) Perform acts as are necessary or expedient to collect,
39 18 conserve, or protect its assets or property, including the
39 19 power to sell, compound, compromise, or assign debts for
39 20 purposes of collection upon terms and conditions as the
39 21 liquidator deems best.
39 22 (c) Pursue any creditor's remedies available to enforce
39 23 claims.
39 24 (7) Conduct public and private sales of the property of
39 25 the establishment seller.
39 26 (8) Use assets of the establishment seller under a
39 27 liquidation order to transfer obligations of purchase
39 28 agreements to a solvent establishment seller, if the transfer
39 29 can be accomplished without prejudice to the applicable
39 30 priorities under subsection 18.
39 31 (9) Acquire, hypothecate, encumber, lease, improve, sell,
39 32 transfer, abandon, or otherwise dispose of or deal with
39 33 property of the establishment seller at its market value or
39 34 upon terms and conditions as are fair and reasonable. The
39 35 liquidator shall also have power to execute, acknowledge, and
40 1 deliver deeds, assignments, releases, and other instruments
40 2 necessary to effectuate a sale of property or other
40 3 transaction in connection with the liquidation.
40 4 (10) Borrow money on the security of the establishment's
40 5 seller's assets or without security and execute and deliver
40 6 documents necessary to that transaction for the purpose of
40 7 facilitating the liquidation. Money borrowed pursuant to this
40 8 subparagraph shall be repaid as an administrative expense and
40 9 shall have priority over any other class 1 claims under the
40 10 priority of distribution established in subsection 18.
40 11 (11) Enter into contracts as necessary to carry out the
40 12 order to liquidate and affirm or disavow contracts to which
40 13 the establishment seller is a party.
40 14 (12) Continue to prosecute and to institute in the name of
40 15 the establishment seller or in the liquidator's own name any
40 16 and all suits and other legal proceedings, in this state or
40 17 elsewhere, and to abandon the prosecution of claims the
40 18 liquidator deems unprofitable to pursue further.
40 19 (13) Prosecute an action on behalf of the creditors,
40 20 purchasers, or owners against an officer of the establishment
40 21 seller or any other person.
40 22 (14) Remove records and property of the establishment
40 23 seller to the offices of the commissioner or to other places
40 24 as may be convenient for the purposes of efficient and orderly
40 25 execution of the liquidation.
40 26 (17) File necessary documents for recording in the office
40 27 of the recorder of deeds or record office in this state or
40 28 elsewhere where property of the establishment seller is
40 29 located.
40 30 (18) Assert defenses available to the establishment seller
40 31 against third persons including statutes of limitations,
40 32 statutes of fraud, and the defense of usury. A waiver of a
40 33 defense by the establishment seller after a petition in
40 34 liquidation has been filed shall not bind the liquidator.
40 35 Sec. 74. Section 523A.901, subsection 4, paragraph a,
41 1 subparagraphs (1) and (2), Code 2007, are amended to read as
41 2 follows:
41 3 (1) Mailing notice, by first=class mail, to all persons
41 4 known or reasonably expected to have claims against the
41 5 establishment seller, including purchasers, at their last
41 6 known address as indicated by the records of the establishment
41 7 seller.
41 8 (2) Publication of notice in a newspaper of general
41 9 circulation in the county in which the establishment seller
41 10 has its principal place of business and in other locations as
41 11 the liquidator deems appropriate.
41 12 Sec. 75. Section 523A.901, subsection 4, paragraph c, Code
41 13 2007, is amended to read as follows:
41 14 c. If notice is given pursuant to this subsection, the
41 15 distribution of assets of the establishment seller under this
41 16 chapter shall be conclusive with respect to claimants, whether
41 17 or not a claimant actually received notice.
41 18 Sec. 76. Section 523A.901, subsection 5, Code 2007, is
41 19 amended to read as follows:
41 20 5. ACTIONS BY AND AGAINST LIQUIDATOR.
41 21 a. After issuance of an order appointing a liquidator of
41 22 an establishment the business of a seller, an action at law or
41 23 equity shall not be brought against the establishment seller
41 24 within this state or elsewhere, and existing actions shall not
41 25 be maintained or further presented after issuance of the
41 26 order. Whenever in the liquidator's judgment, protection of
41 27 the estate of the establishment seller necessitates
41 28 intervention in an action against the establishment seller
41 29 that is pending outside this state, the liquidator may
41 30 intervene in the action. The liquidator may defend, at the
41 31 expense of the estate of the establishment seller, an action
41 32 in which the liquidator intervenes under this section.
41 33 b. Within two years or such additional time as applicable
41 34 law may permit, the liquidator, after the issuance of an order
41 35 for liquidation, may institute an action or proceeding on
42 1 behalf of the estate of the establishment seller upon any
42 2 cause of action against which the period of limitation fixed
42 3 by applicable law has not expired at the time of the filing of
42 4 the petition upon which the order is entered. If a period of
42 5 limitation is fixed by agreement for instituting a suit or
42 6 proceeding upon a claim, or for filing a claim, proof of
42 7 claim, proof of loss, demand, notice, or the like, or if in a
42 8 proceeding, judicial or otherwise, a period of limitation is
42 9 fixed in the proceeding or pursuant to applicable law for
42 10 taking an action, filing a claim or pleading, or doing an act,
42 11 and if the period has not expired at the date of the filing of
42 12 the petition, the liquidator may, for the benefit of the
42 13 estate, take any action or do any act, required of or
42 14 permitted to the establishment seller, within a period of one
42 15 hundred eighty days subsequent to the entry of an order for
42 16 liquidation, or within a further period as is shown to the
42 17 satisfaction of the court not to be unfairly prejudicial to
42 18 the other party.
42 19 c. A statute of limitations or defense of laches shall not
42 20 run with respect to an action against an establishment a
42 21 seller between the filing of a petition for liquidation
42 22 against the establishment business of a seller and the denial
42 23 of the petition. An action against the establishment seller
42 24 that might have been commenced when the petition was filed may
42 25 be commenced within sixty days after the petition is denied.
42 26 Sec. 77. Section 523A.901, subsection 6, paragraph a, Code
42 27 2007, is amended to read as follows:
42 28 a. As soon as practicable after the liquidation order but
42 29 not later than one hundred twenty days after such order, the
42 30 liquidator shall prepare in duplicate a list of the
42 31 establishment's seller's assets. The list shall be amended or
42 32 supplemented as the liquidator may determine. One copy shall
42 33 be filed in the office of the clerk of court, and one copy
42 34 shall be retained for the liquidator's files. Amendments and
42 35 supplements shall be similarly filed.
43 1 Sec. 78. Section 523A.901, subsection 7, paragraph a, Code
43 2 2007, is amended to read as follows:
43 3 a. A transfer made and an obligation incurred by an
43 4 establishment a seller whose business is within one year prior
43 5 to the filing of a successful petition for liquidation under
43 6 this chapter is fraudulent as to then existing and future
43 7 creditors if made or incurred without fair consideration, or
43 8 with actual intent to hinder, delay, or defraud either
43 9 existing or future creditors. A fraudulent transfer made or
43 10 an obligation incurred by an establishment a seller whose
43 11 business is ordered to be liquidated under this chapter may be
43 12 avoided by the liquidator, except as to a person who in good
43 13 faith is a purchaser, lienor, or obligee for a present fair
43 14 equivalent value. A purchaser, lienor, or obligee, who in
43 15 good faith has given a consideration less than present fair
43 16 equivalent value for such transfer, lien, or obligation, may
43 17 retain the property, lien, or obligation as security for
43 18 repayment. The court may, on due notice, order any such
43 19 transfer, lien, or obligation to be preserved for the benefit
43 20 of the estate, and in that event, the receiver shall succeed
43 21 to and may enforce the rights of the purchaser, lienor, or
43 22 obligee.
43 23 Sec. 79. Section 523A.901, subsection 7, paragraph b,
43 24 subparagraph (2), Code 2007, is amended to read as follows:
43 25 (2) A transfer of real property is made when it becomes
43 26 perfected so that a subsequent bona fide purchaser from the
43 27 establishment seller could not obtain rights superior to the
43 28 rights of the transferee.
43 29 Sec. 80. Section 523A.901, subsection 8, paragraphs a, b,
43 30 and c, Code 2007, are amended to read as follows:
43 31 a. After a petition for liquidation has been filed, a
43 32 transfer of real property of the establishment seller made to
43 33 a person acting in good faith is valid against the liquidator
43 34 if made for a present fair equivalent value. If the transfer
43 35 is not made for a present fair equivalent value, then the
44 1 transfer is valid to the extent of the present consideration
44 2 actually paid for which amount the transferee shall have a
44 3 lien on the property transferred. The commencement of a
44 4 proceeding in liquidation is constructive notice upon the
44 5 recording of a copy of the petition for or order of
44 6 liquidation with the recorder of deeds in the county where any
44 7 real property in question is located. The exercise by a court
44 8 of the United States or a state or jurisdiction to authorize a
44 9 judicial sale of real property of the establishment seller
44 10 within a county in a state shall not be impaired by the
44 11 pendency of a proceeding unless the copy is recorded in the
44 12 county prior to the consummation of the judicial sale.
44 13 b. After a petition for liquidation has been filed and
44 14 before either the liquidator takes possession of the property
44 15 of the establishment seller or an order of liquidation is
44 16 granted:
44 17 (1) A transfer of the property, other than real property,
44 18 of the establishment seller made to a person acting in good
44 19 faith is valid against the liquidator if made for a present
44 20 fair equivalent value. If the transfer was not made for a
44 21 present fair equivalent value, then the transfer is valid to
44 22 the extent of the present consideration actually paid for
44 23 which amount the transferee shall have a lien on the property
44 24 transferred.
44 25 (2) If acting in good faith, a person indebted to the
44 26 establishment seller or holding property of the establishment
44 27 seller may pay the debt or deliver the property, or any part
44 28 of the property, to the establishment seller or upon the
44 29 establishment's seller's order as if the petition were not
44 30 pending.
44 31 (3) A person having actual knowledge of the pending
44 32 liquidation is not acting in good faith.
44 33 (4) A person asserting the validity of a transfer under
44 34 this subsection has the burden of proof. Except as provided
44 35 in this subsection, a transfer by or on behalf of the
45 1 establishment seller after the date of the petition for
45 2 liquidation by any person other than the liquidator is not
45 3 valid against the liquidator.
45 4 c. A person receiving any property from the establishment
45 5 seller or any benefit of the property of the establishment
45 6 seller which is a fraudulent transfer under paragraph "a" is
45 7 personally liable for the property or benefit and shall
45 8 account to the liquidator.
45 9 Sec. 81. Section 523A.901, subsection 9, paragraph a,
45 10 subparagraphs (1) and (2), Code 2007, are amended to read as
45 11 follows:
45 12 (1) A preference is a transfer of the property of an
45 13 establishment a seller to or for the benefit of a creditor for
45 14 an antecedent debt made or suffered by the establishment
45 15 seller within one year before the filing of a successful
45 16 petition for liquidation under this chapter, the effect of
45 17 which transfer may be to enable the creditor to obtain a
45 18 greater percentage of this debt than another creditor of the
45 19 same class would receive. If a liquidation order is entered
45 20 while the establishment seller is already subject to a
45 21 receivership, then the transfers are preferences if made or
45 22 suffered within one year before the filing of the successful
45 23 petition for the receivership, or within two years before the
45 24 filing of the successful petition for liquidation, whichever
45 25 time is shorter.
45 26 (2) A preference may be avoided by the liquidator if any
45 27 of the following exist:
45 28 (a) The establishment seller was insolvent at the time of
45 29 the transfer.
45 30 (b) The transfer was made within four months before the
45 31 filing of the petition.
45 32 (c) At the time the transfer was made, the creditor
45 33 receiving it or to be benefited by the transfer or the
45 34 creditor's agent acting with reference to the transfer had
45 35 reasonable cause to believe that the establishment seller was
46 1 insolvent or was about to become insolvent.
46 2 (d) The creditor receiving the transfer was an officer, or
46 3 an employee, attorney, or other person who was in fact in a
46 4 position of comparable influence in the establishment seller
46 5 to an officer whether or not the person held the position of
46 6 an officer, owner, or other person, firm, corporation,
46 7 association, or aggregation of persons with whom the
46 8 establishment seller did not deal at arm's length.
46 9 Sec. 82. Section 523A.901, subsection 9, paragraph b,
46 10 subparagraph (2), Code 2007, is amended to read as follows:
46 11 (2) A transfer of real property is made when it becomes
46 12 perfected so that a subsequent bona fide purchaser from the
46 13 establishment seller could not obtain rights superior to the
46 14 rights of the transferee.
46 15 Sec. 83. Section 523A.901, subsection 9, paragraphs e, i,
46 16 and j, Code 2007, are amended to read as follows:
46 17 e. If a lien which is voidable under paragraph "a",
46 18 subparagraph (2), has been dissolved by the furnishing of a
46 19 bond or other obligation, the surety of which has been
46 20 indemnified directly or indirectly by the transfer or the
46 21 creation of a lien upon property of an establishment a seller
46 22 before the filing of a petition under this chapter which
46 23 results in the liquidation order, the indemnifying transfer or
46 24 lien is also voidable.
46 25 i. If a creditor has been preferred for property which
46 26 becomes a part of the establishment's seller's estate, and
46 27 afterward in good faith gives the establishment seller further
46 28 credit without security of any kind, the amount of the new
46 29 credit remaining unpaid at the time of the petition may be set
46 30 off against the preference which would otherwise be
46 31 recoverable from the creditor.
46 32 j. If within four months before the filing of a successful
46 33 petition for liquidation under this chapter, or at any time in
46 34 contemplation of a proceeding to liquidate, an establishment a
46 35 seller, directly or indirectly, pays money or transfers
47 1 property to an attorney for services rendered or to be
47 2 rendered, the transaction may be examined by the court on its
47 3 own motion or shall be examined by the court on petition of
47 4 the liquidator. The payment or transfer shall be held valid
47 5 only to the extent of a reasonable amount to be determined by
47 6 the court. The excess may be recovered by the liquidator for
47 7 the benefit of the estate. However, where the attorney is in
47 8 a position of influence in the establishment business of the
47 9 seller or an affiliate, payment of any money or the transfer
47 10 of any property to the attorney for services rendered or to be
47 11 rendered shall be governed by the provisions of paragraph "a",
47 12 subparagraph (2), subparagraph subdivision (d).
47 13 Sec. 84. Section 523A.901, subsection 9, paragraph k,
47 14 subparagraphs (1) and (2), Code 2007, are amended to read as
47 15 follows:
47 16 (1) An officer, manager, employee, shareholder,
47 17 subscriber, attorney, or other person acting on behalf of the
47 18 establishment seller who knowingly participates in giving any
47 19 preference when the person has reasonable cause to believe the
47 20 establishment seller is or is about to become insolvent at the
47 21 time of the preference is personally liable to the liquidator
47 22 for the amount of the preference. There is an inference that
47 23 reasonable cause exists if the transfer was made within four
47 24 months before the date of filing of this successful petition
47 25 for liquidation.
47 26 (2) A person receiving property from the establishment
47 27 seller or the benefit of the property of the establishment
47 28 seller as a preference voidable under paragraph "a" is
47 29 personally liable for the property and shall account to the
47 30 liquidator.
47 31 Sec. 85. Section 523A.901, subsection 13, paragraph d,
47 32 Code 2007, is amended to read as follows:
47 33 d. A judgment or order against an establishment a seller
47 34 entered after the date of filing of a successful petition for
47 35 liquidation, or a judgment or order against the establishment
48 1 seller entered at any time by default or by collusion need not
48 2 be considered as evidence of liability or of the amount of
48 3 damages. A judgment or order against an establishment a
48 4 seller before the filing of the petition need not be
48 5 considered as evidence of liability or of the amount of
48 6 damages.
48 7 Sec. 86. Section 523A.901, subsection 16, Code 2007, is
48 8 amended to read as follows:
48 9 16. CLAIMS OF OTHER PERSON. If a creditor, whose claim
48 10 against an establishment a seller is secured in whole or in
48 11 part by the undertaking of another person, fails to prove and
48 12 file that claim, then the other person may do so in the
48 13 creditor's name and shall be subrogated to the rights of the
48 14 creditor, whether the claim has been filed by the creditor or
48 15 by the other person in the creditor's name to the extent that
48 16 the other person discharges the undertaking. However, in the
48 17 absence of an agreement with the creditor to the contrary, the
48 18 other person is not entitled to any distribution until the
48 19 amount paid to the creditor on the undertaking plus the
48 20 distributions paid on the claim from the establishment's
48 21 seller's estate to the creditor equal the amount of the entire
48 22 claim of the creditor. An excess received by the creditor
48 23 shall be held by the creditor in trust for the other person.
48 24 Sec. 87. Section 523A.901, subsection 18, unnumbered
48 25 paragraph 1, Code 2007, is amended to read as follows:
48 26 The priority of distribution of claims from the
48 27 establishment's seller's estate shall be in accordance with
48 28 the order in which each class of claims is set forth. Claims
48 29 in each class shall be paid in full or adequate funds retained
48 30 for the payment before the members of the next class receive
48 31 any payment. Subclasses shall not be established within a
48 32 class. The order of distribution of claims is as follows:
48 33 Sec. 88. Section 523A.901, subsection 18, paragraph a,
48 34 subparagraph (1), Code 2007, is amended to read as follows:
48 35 (1) Actual and necessary costs of preserving or recovering
49 1 the assets of the establishment seller.
49 2 Sec. 89. Section 523A.901, subsection 19, paragraph a,
49 3 Code 2007, is amended to read as follows:
49 4 a. The liquidator shall review claims duly filed in the
49 5 liquidation and shall make further investigation as necessary.
49 6 The liquidator may compound, compromise, or in any other
49 7 manner negotiate the amount for which claims will be
49 8 recommended to the court except where the liquidator is
49 9 required by law to accept claims as settled by a person or
49 10 organization. Unresolved disputes shall be determined under
49 11 subsection 15. As soon as practicable, the liquidator shall
49 12 present to the court a report of the claims against the
49 13 establishment seller with the liquidator's recommendations.
49 14 The report shall include the name and address of each claimant
49 15 and the amount of the claim finally recommended.
49 16 Sec. 90. Section 523A.901, subsection 21, paragraph b,
49 17 Code 2007, is amended to read as follows:
49 18 b. Funds withheld under subsection 14 and not distributed
49 19 shall upon discharge of the liquidator be deposited with the
49 20 treasurer of state and paid pursuant to subsection 18. Sums
49 21 remaining which under subsection 18 would revert to the
49 22 undistributed assets of the establishment seller shall be
49 23 transferred to the insurance division regulatory fund and
49 24 become the property of the state as provided under paragraph
49 25 "a", unless the commissioner in the commissioner's discretion
49 26 petitions the court to reopen the liquidation pursuant to
49 27 subsection 23.
49 28 Sec. 91. Section 523A.901, subsection 24, Code 2007, is
49 29 amended to read as follows:
49 30 24. DISPOSITION OF RECORDS DURING AND AFTER TERMINATION OF
49 31 LIQUIDATION. If it appears to the commissioner that the
49 32 records of an establishment the business of a seller in the
49 33 process of liquidation or completely liquidated are no longer
49 34 useful, the commissioner may recommend to the court and the
49 35 court shall direct what records shall be retained for future
50 1 reference and what records shall be destroyed.
50 2 SF 559
50 3 av/cc/26