Bill Text: IA HF404 | 2011-2012 | 84th General Assembly | Enrolled

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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Bill Title: A bill for an act relating to payments for prepaid cemetery and funeral merchandise, and funeral services that are required to be placed in trust or secured by a surety bond. (Formerly HF 13) Effective 7-01-11.

Spectrum: Committee Bill

Status: (Passed) 2011-12-31 - END OF 2011 ACTIONS [HF404 Detail]

Download: Iowa-2011-HF404-Enrolled.html

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House File 404
AN ACT
RELATING TO PAYMENTS FOR PREPAID CEMETERY AND FUNERAL
MERCHANDISE, AND FUNERAL SERVICES THAT ARE REQUIRED TO BE
PLACED IN TRUST OR SECURED BY A SURETY BOND.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
Section 1. Section 523A.201, subsections 2 and 3, Code 2011,
are amended to read as follows:
2. If a seller agrees to furnish cemetery merchandise,
funeral merchandise, funeral services, or a combination thereof
and performance or delivery may be more than one hundred twenty
days following the initial payment on the account, a minimum
of eighty percent of all payments made under the a guaranteed
purchase agreement or a minimum of one hundred percent of all

House File 404, p. 2
payments made under a nonguaranteed purchase agreement shall be
placed and remain in trust until the person for whose benefit
the funds were paid dies.
3. If a purchase agreement for cemetery merchandise,
funeral merchandise, funeral services, or a combination thereof
provides that payments are to be made in installments, the
seller shall deposit eighty percent of each payment made under
a guaranteed purchase agreement and one hundred percent of each
payment made under a nonguaranteed purchase agreement in the
trust fund until the full amount required to be placed in trust
has been deposited. If the purchase agreement is financed with
or sold to a financial institution, the purchase agreement
shall be considered paid in full and the trust requirements
shall be satisfied within fifteen days after the seller
receives funds from the financial institution.
Sec. 2. Section 523A.201, subsection 8, Code 2011, is
amended to read as follows:
8. Interest or income earned on amounts deposited in trust
shall remain in trust under the same terms and conditions
as payments made under the purchase agreement, except that
a limited liability corporation that was formed in 2002 for
the purpose of purchasing a cemetery from a foreign entity
reorganizing under bankruptcy and such corporation is comprised
of six establishments all located within the same county seller
may withdraw so much of the interest or income as represents
the difference between the amount needed to adjust the trust
funds for inflation as set by the commissioner based on the
consumer price index and the interest or income earned during
the preceding year not to exceed fifty percent of the total
interest or income on a calendar-year basis. The early
withdrawal of interest or income under this provision does
not affect the purchaser’s right to a credit of such interest
or income in the event of a nonguaranteed price agreement,
cancellation, or nonperformance by such limited liability
corporation a seller .
Sec. 3. Section 523A.405, subsection 8, Code 2011, is
amended to read as follows:
8. The amount of the surety bond shall equal eighty percent
of the payments received pursuant to guaranteed purchase
agreements and one hundred percent of the payments received
pursuant to nonguaranteed purchase agreements , or the

House File 404, p. 3
applicable portion thereof, for cemetery merchandise, funeral
merchandise, funeral services, or a combination thereof, and
the amount needed to adjust the amount of the surety bond for
inflation as set by the commissioner based on the consumer
price index. The seller shall review the amount of the surety
bond no less than annually and shall increase the bond as
necessary to reflect additional payments. The amount needed to
adjust for inflation shall be added annually to the surety bond
during the first quarter of the seller’s fiscal year.
Sec. 4. Section 523A.601, subsection 6, paragraph a, Code
2011, is amended to read as follows:
a. (1) A guaranteed purchase agreement that is funded
by a trust shall include a conspicuous statement in language
substantially similar to the following language:
For your prearranged funeral agreement, we will deposit not
less than eighty percent of your payments in trust at (name
of financial institution), (street address), (city), (state)
(zip code) within fifteen days following receipt of the funds.
For your protection, you will be notified within sixty days
from the date of deposit from by the financial institution,
if acting as a trustee of trust funds under this chapter ,
to confirm that the deposit of these funds has been made
establishing a trust fund as required by law. If you do not
receive this notification, you may contact the Iowa insurance
division for assistance by calling the insurance division at
(telephone number) or by mail at (street address), (city), Iowa
(zip code), or you may contact the financial institution by
calling the financial institution at (telephone number) or by
mail at the address indicated above.
(2) A nonguaranteed purchase agreement that is funded
by a trust shall include a conspicuous statement in language
substantially similar to the following language:
For your prearranged funeral agreement, we will deposit all
of your payments in trust at (name of financial institution),
(street address), (city), (state) (zip code) within fifteen
days following receipt of the funds. For your protection, you
will be notified within sixty days from the date of deposit
by the financial institution, if acting as a trustee of trust
funds under this chapter, to confirm that the deposit of these
funds has been made establishing a trust fund as required by
law. If you do not receive this notification, you may contact
the Iowa insurance division for assistance by calling the

House File 404, p. 4
insurance division at (telephone number) or by mail at (street
address), (city), Iowa (zip code), or you may contact the
financial institution by calling the financial institution at
(telephone number) or by mail at the address indicated above.
______________________________
KRAIG PAULSEN
Speaker of the House
______________________________
JOHN P. KIBBIE
President of the Senate
I hereby certify that this bill originated in the House and
is known as House File 404, Eighty-fourth General Assembly.
______________________________
W. CHARLES SMITHSON
Chief Clerk of the House
Approved _______________, 2011
______________________________
TERRY E. BRANSTAD
Governor