CHAPTER 712. PERPETUAL CARE CEMETERIES - Texas Statutes

HEALTH AND SAFETY CODE

TITLE 8. DEATH AND DISPOSITION OF THE BODY

SUBTITLE C. CEMETERIES AND CREMATORIES

CHAPTER 712. PERPETUAL CARE CEMETERIES

SUBCHAPTER A. GENERAL PROVISIONS

Sec. 712.001. DEFINITIONS. (a) The definitions provided by

Section 711.001 apply to this chapter.

(b) In this chapter:

(1) "Banking department" or "department" means the Banking

Department of Texas.

(2) "Commissioner" means the Banking Commissioner of Texas.

(3) "Corporation" means a corporation that is organized under

this chapter, or any corresponding statute in effect before

September 1, 1993, to operate one or more perpetual care

cemeteries in this state.

(4) "Fund" means a perpetual care trust fund established by one

or more corporations under this chapter or any corresponding

statute in effect before September 1, 1993.

(4-a) "Preconstruction trust" means a trust established by a

corporation under this chapter for the purpose of administering

proceeds from sales of undeveloped mausoleum spaces.

(4-b) "Preconstruction trustee" means the trustee of a

preconstruction trust.

(5) "Trustee" means the trustee of a cemetery perpetual care

trust fund.

(6) "Undeveloped mausoleum space" means a crypt or niche in a

mausoleum or mausoleum section that is designed to contain at

least 10 crypt or niche interments and that is not ready for the

interment of human remains or cremated remains on the date an

interment right pertaining to the mausoleum space is sold. The

term does not include a private mausoleum or mausoleum section in

which all mausoleum spaces are intended to be sold under a single

contract.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 24, eff. Sept. 1,

1993.

Amended by:

Acts 2005, 79th Leg., Ch.

345, Sec. 1, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1290, Sec. 1, eff. September 1, 2005.

Sec. 712.002. EXEMPTIONS FROM CHAPTER. This chapter does not

apply to:

(1) a family, fraternal, or community cemetery that is not

larger than 10 acres;

(2) an unincorporated association of plot owners not operated

for profit;

(3) a church, a religious society or denomination, or an entity

solely administering the temporalities of a church or religious

society or denomination; or

(4) a public cemetery owned by this state, a county, or a

municipality.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 25, eff. Sept. 1,

1993; Acts 2003, 78th Leg., ch. 562, Sec. 36, eff. Sept. 1, 2003.

Sec. 712.003. INCORPORATION REQUIRED; MINIMUM CAPITAL. (a) A

perpetual care cemetery may not be operated in this state unless

articles of incorporation are filed with the secretary of state

showing:

(1) subscriptions and payments in cash for the corporation's

full capital stock;

(2) the location of its perpetual care cemetery; and

(3) a certificate showing the deposit in its fund of the minimum

amount required under Section 712.004.

(b) A corporation chartered on or after September 5, 1955, and

before September 1, 1993, must have a minimum capital of:

(1) $15,000, if the cemetery serves a municipality with a

population of less than 15,000;

(2) $30,000, if the cemetery serves a municipality with a

population of 15,000 to 25,000; or

(3) $50,000, if the cemetery serves a municipality with a

population of at least 25,000.

(c) A corporation chartered on or after September 1, 1993, must

have a minimum capital of $75,000.

(d) A nonprofit association or corporation operated solely for

the benefit of plot owners seeking to convert a cemetery to a

perpetual care cemetery under this chapter is not required to

meet the requirements prescribed by this section and Section

712.004 if the cemetery has existed for at least 75 years and the

association or corporation has operated the cemetery for the

preceding 10 years.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1991, 72nd Leg., ch. 14, Sec. 218, eff. Sept. 1,

1991; Acts 1993, 73rd Leg., ch. 634, Sec. 26, eff. Sept. 1, 1993.

Sec. 712.0031. NOTICES TO BANKING DEPARTMENT. (a) Not later

than the 30th day after the date a corporation files its articles

of incorporation with the secretary of state, the corporation

shall notify the banking department in writing of its intent to

operate a perpetual care cemetery in this state. The notice shall

be accompanied by a filing fee of $500, shall be sworn to and

verified under oath by all persons subscribing to the capital

stock of the corporation, and shall contain:

(1) the information required to be provided to the secretary of

state under Section 712.003;

(2) the names and addresses of any other persons or entities who

are or will be beneficial owners of the capital stock of the

corporation or otherwise share an interest in the ownership of

the corporation's capital stock, or who have paid or will pay any

portion of the consideration therefor;

(3) the name and address of any person or entity to whom the

capital stock or assets of the corporation are or will be pledged

as security for any loan; and

(4) the name and address of the person who will actively manage

the cemetery operations of the corporation along with a brief

statement of that person's working experience in the cemetery

industry.

(b) A cemetery operations manager must have at least two years

of experience in cemetery management.

(c) If the corporation fails to provide to the banking

department the information prescribed by Subsection (a), the

commissioner may instruct the secretary of state to cancel the

corporation's charter and serve notice of the cancellation on the

corporation by registered or certified letter, addressed to the

corporation's address.

(d) A corporation shall notify the commissioner in writing of

any change in the controlling ownership interest of the capital

stock of the corporation not later than the 30th day following

the change of controlling ownership interest.

Added by Acts 1993, 73rd Leg., ch. 634, Sec. 27, eff. Sept. 1,

1993.

Sec. 712.004. PERPETUAL CARE TRUST FUND REQUIRED. (a) Before

obtaining a corporate charter, the incorporators of a corporation

chartered on or after September 3, 1945, and before September 1,

1993, must establish a fund by permanently depositing in cash

with the trustee of the fund:

(1) $15,000, if the corporation has capital stock of $15,000;

(2) $30,000, if the corporation has capital stock of $30,000; or

(3) $50,000, if the corporation has capital stock of $50,000 or

more.

(b) Before obtaining a corporate charter, the incorporators of a

corporation chartered on or after September 1, 1993, must

establish a fund by permanently depositing in cash with the

trustee of the fund an amount of not less than $50,000 for each

perpetual care cemetery operated in this state.

(c) The fund shall be permanently set aside and deposited in

trust with the trustee in accordance with Subchapter B.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 28, eff. Sept. 1,

1993.

Sec. 712.005. CANCELLATION OF CHARTER FOR FAILURE TO BEGIN

OPERATION OF PERPETUAL CARE CEMETERY. (a) If a corporation

chartered under Section 712.003 does not begin actual operation

of its perpetual care cemetery for six months after the charter

is granted and delivered, the commissioner may instruct the

secretary of state to cancel the charter and serve notice of the

cancellation on the corporation by registered or certified

letter, addressed to the corporation's address.

(b) The commissioner may rescind the order of cancellation on:

(1) the application of the directors;

(2) the payment to the commissioner of a penalty set by the

commissioner in an amount not to exceed $500;

(3) the execution and delivery to the commissioner of an

agreement to begin actual operation of the perpetual care

cemetery not later than one month after the date of the

agreement; and

(4) a proper showing by the trustee that the fund is on deposit.

(c) If the corporation does not begin actual operation as

agreed, the commissioner by order may set aside the order of

rescission and the cancellation is final. The commissioner shall

make a full report of the cancellation to the attorney general

for liquidation of the corporation, if liquidation is necessary.

(d) If no sale of the dedicated cemetery property of the

corporation is made, a certified copy of the order of

cancellation authorizes the trustee to refund the fund to the

incorporators who signed the corporation's articles of

incorporation.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 29, eff. Sept. 1,

1993.

Sec. 712.007. NOTICE OF PERPETUAL CARE REQUIRED. (a) A

corporation shall post a sign at or near a cemetery entrance or

administration building and readily accessible to the public.

(b) The sign must contain the following:

(1) "Perpetual Care Cemetery," or "Endowment Care Cemetery";

(2) the names and telephone numbers of two of the corporation's

officers or directors; and

(3) the name of each bank or trust company entrusted with the

fund.

(c) A corporation must include the following statement in each

sales contract, certificate of ownership, or other instrument of

conveyance of the exclusive right of sepulture:

"This cemetery is operated as a perpetual care cemetery, which

means that a perpetual care fund for its maintenance has been

established in conformity with the laws of the State of Texas.

Perpetual care means to maintain, repair, and care for the

cemetery, including the roads on cemetery property."

(d) The term "endowment care" may be substituted for the term

"perpetual care" in the statement required by Subsection (c).

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 30, eff. March 1,

1994.

Amended by:

Acts 2009, 81st Leg., R.S., Ch.

341, Sec. 1, eff. September 1, 2009.

Sec. 712.008. RULES. (a) The Finance Commission of Texas may

adopt rules to enforce and administer this chapter, including

rules establishing fees to defray the costs of enforcing and

administering this chapter.

(b) The Finance Commission of Texas shall adopt rules

establishing reasonable standards for:

(1) timely placement of burial markers or monuments in a

perpetual care cemetery; and

(2) timely response to consumer complaints made to a corporation

that operates a perpetual care cemetery.

Added by Acts 2001, 77th Leg., ch. 699, Sec. 13, eff. Sept. 1,

2001. Amended by Acts 2003, 78th Leg., ch. 562, Sec. 37, eff.

Sept. 1, 2003.

Sec. 712.009. LIMITATIONS ON BURIALS; DAMAGES. (a) The Finance

Commission of Texas shall adopt rules to administer and enforce

this section.

(b) An individual, corporation, partnership, firm, trust, or

association that operates or owns a perpetual care cemetery may

not inter the remains of an individual who may have caused the

death of another person if:

(1) the victim is interred in that cemetery; and

(2) the person having the right to control the disposition of

the victim's remains under Section 711.002(a) gives written

notice to the cemetery requesting that the individual not be

interred in that cemetery if:

(A) the individual was convicted under Section 19.02, 19.03,

19.05, or 49.08, Penal Code, for causing the death of the victim,

or convicted under a similar statute of another state; or

(B) the individual was identified as causing the death of the

victim, in violation of a provision described by Paragraph (A),

by the medical examiner or law enforcement agency having

jurisdiction over the offense, and the individual dies before

being convicted of the offense.

(c) An individual, corporation, partnership, firm, trust, or

association that violates Subsection (b) is liable to the person

having the right to control the disposition of the victim's

remains under Section 711.002(a) for:

(1) any actual damages incurred;

(2) punitive damages not to exceed $10,000; and

(3) reasonable attorney's fees and court costs incurred in an

effort to enforce compliance with Subsection (b).

(d) Damages under Subsection (c) may not be assessed if the

individual, corporation, partnership, firm, trust, or association

that operates the cemetery proves by a preponderance of the

evidence that:

(1) the cemetery is the only cemetery serving the municipality

or county in which the victim and individual causing the victim's

death lived; and

(2) the bodies of the victim and individual causing the victim's

death were placed as far apart as possible in, or in different

parts of, the cemetery.

(e) An individual, corporation, partnership, firm, trust, or

association operating or owning a perpetual care cemetery and

barred from interring remains of an individual under this section

may not be held liable for damages by a person having the right

to control the disposition of the individual's remains under

Section 711.002(a), including damages for failure to provide for

interment under a contract executed before the delivery of the

written notice under Subsection (b)(2).

(f) A notice under Subsection (b)(2) expires seven years after

the date the notice is delivered. A new notice may be delivered

on the expiration of each previous notice.

Added by Acts 2001, 77th Leg., ch. 699, Sec. 14, eff. Sept. 1,

2001.

SUBCHAPTER B. PERPETUAL CARE TRUST FUND

Sec. 712.021. ESTABLISHMENT AND PURPOSES OF FUND. (a) A

corporation that operates a perpetual care cemetery in this state

shall have a fund established with a trust company or a bank with

trust powers that is located in this state. The trust company or

bank may not have more than one director who is also a director

of the corporation.

(b) The principal of the fund may not be reduced voluntarily,

and it must remain inviolable. The trustee shall maintain the

principal of the fund separate from all operating funds of the

corporation.

(c) In establishing a fund, the corporation may adopt plans for

the general care, maintenance, and embellishment of its perpetual

care cemetery.

(d) The fund and the trustee are governed by the Texas Trust

Code (Section 111.001 et seq., Property Code).

(e) A corporation that establishes a fund may receive and hold

for the fund and as a part of the fund or as an incident to the

fund any property contributed to the fund.

(f) The fund and contributions to the fund are for charitable

purposes. The perpetual care financed by the fund is:

(1) the discharge of a duty due from the corporation to persons

interred and to be interred in its perpetual care cemetery; and

(2) for the benefit and protection of the public by preserving

and keeping the perpetual care cemetery from becoming a place of

disorder, reproach, and desolation in the community in which the

perpetual care cemetery is located.

(g) The trustors of two or more perpetual care trust funds may

establish a common trust fund in which deposits required by this

chapter are made, provided that separate records of principal and

income are maintained for each perpetual care cemetery for the

benefit of which the common trust fund is established, and

further provided that the income attributable to each perpetual

care cemetery is used only for the perpetual care of that

cemetery.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 31, eff. Sept. 1,

1993.

Sec. 712.022. OPERATION OF PERPETUAL CARE CEMETERY. A

corporation authorized by law to operate a perpetual care

cemetery but not doing so may do so if the corporation:

(1) notifies the commissioner; and

(2) establishes a fund as provided by Section 712.021 in an

amount equal to the larger of:

(A) the amount that would have been paid into the fund if the

cemetery operated as a perpetual care cemetery from the date of

the cemetery's first sale of plots; or

(B) the minimum amount provided by Section 712.004.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 32, eff. Sept. 1,

1993.

Sec. 712.023. VALIDITY OF CONTRIBUTIONS. A contribution to a

fund for perpetual care is not invalid because of:

(1) indefiniteness or uncertainty of the person designated as

beneficiary in the instrument establishing the fund; or

(2) a violation of the law against perpetuities or the law

against the suspension of the power of alienation of title to or

use of property.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 33, eff. Sept. 1,

1993.

Sec. 712.024. AMENDMENT OF TRUST INSTRUMENT. A corporation and

the trustee of a fund may, by agreement, amend the instrument

that established the fund to include any provision that is

consistent with this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 34, eff. Sept. 1,

1993.

Sec. 712.025. USE OF FUND INCOME. Fund income may be used only

to provide the perpetual care described by the instrument that

established the fund, including the general care and maintenance

of the property entitled to perpetual care in the perpetual care

cemetery.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 35, eff. Sept. 1,

1993; Acts 2003, 78th Leg., ch. 562, Sec. 38, eff. Sept. 1, 2003.

Sec. 712.026. SUIT BY PLOT OWNERS TO MAINTAIN PERPETUAL CARE.

(a) If the directors of a corporation do not generally care for

and maintain the corporation's perpetual care cemetery, the

district court of the county in which the perpetual care cemetery

is located may:

(1) by injunction compel the directors to expend the net income

of the corporation's fund as required by this chapter; or

(2) appoint a receiver to take charge of the fund and expend the

net income of the fund as required by this chapter.

(b) The suit for relief under this section must be brought by at

least five owners of plots located in the perpetual care

cemetery.

(c) In a suit for relief under this section, court costs and

attorney's fees shall be awarded:

(1) to the directors of the corporation, if it is found that the

directors are substantially expending the available net income of

the fund as required by this subchapter; or

(2) to the plot owners initiating the suit, if it is found that

the directors are not substantially expending the available net

income of the fund as required by this subchapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 36, eff. Sept. 1,

1993; Acts 2001, 77th Leg., ch. 106, Sec. 1, eff. Sept. 1, 2001.

Sec. 712.027. INVESTMENT OF FUND. (a) A trustee shall invest

and manage the investment of the principal of a fund in

accordance with the Texas Trust Code (Section 111.001 et seq.,

Property Code).

(b) An investment must be made at not more than the prevailing

market value of the securities at the time of acquisition.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 37, eff. Sept. 1,

1993.

Sec. 712.028. AMOUNT OF FUND DEPOSITS FROM SALES. (a) A

corporation shall deposit in its fund an amount that is at least:

(1) the greater of:

(A) $1.75 a square foot of ground area conveyed as perpetual

care property; or

(B) 15 percent of the total purchase price of that ground area;

(2) the greater of:

(A) $105 for each crypt interment right for mausoleum interment

or lawn crypt interment conveyed as perpetual care property, or

$60 for each crypt interment right if that crypt is accessible

only through another crypt; or

(B) seven percent of the total purchase price of that crypt

interment right; and

(3) the greater of:

(A) $35 for each niche interment right for columbarium interment

conveyed; or

(B) 15 percent of the total purchase price of that niche

interment right.

(b) Subsection (a) does not apply to deposits from sales

required to be made by a corporation in its fund before September

1, 1993, under a corresponding statute in effect before that

date.

(c) If a plot owner exchanges a plot for another plot in a

corporation's perpetual care cemetery, the amount to be deposited

in the corporation's fund in respect of the plot received by the

plot owner in the exchange may be reduced by the amount deposited

in the fund in respect of the plot contributed by the plot owner

in the exchange. The amount required to be deposited with respect

to an exchanged plot is the amount required at the time the plot

owner originally contracted to purchase the plot.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1991, 72nd Leg., ch. 14, Sec. 219, eff. Sept. 1,

1991; Acts 1993, 73rd Leg., ch. 634, Sec. 38, eff. Sept. 1, 1993;

Acts 2003, 78th Leg., ch. 562, Sec. 39, eff. Sept. 1, 2003.

Sec. 712.029. ACCOUNTING FOR AND DEPOSITING AMOUNTS. (a) The

part of the purchase price of a plot in a perpetual care cemetery

that is to be deposited in a fund must be shown separately on the

original purchase agreement from the total purchase price. A copy

of the agreement shall be delivered to the purchaser of the plot.

(b) On the sale of a plot, a commission may not be paid to a

broker or salesman on the amount to be deposited in the fund.

(c) A corporation shall deposit in its fund the amount required

under Section 712.028 not later than the 20th day after the end

of the month in which the original purchase agreement has been

paid in full. A corporation may prepay funds into its fund at any

time and, if a surplus exists in the fund from the prepayments,

may credit against the surplus the amounts otherwise required to

be deposited in the fund under Section 712.028 until the surplus

has been depleted. In determining whether a surplus exists from

prepayments, no part of the fund resulting from gifts to the fund

under Section 712.030 may be considered.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1991, 72nd Leg., ch. 14, Sec. 220, eff. Sept. 1,

1991; Acts 1993, 73rd Leg., ch. 634, Sec. 39, eff. Sept. 1, 1993.

Sec. 712.030. USE OF GIFT FOR SPECIAL CARE OF PLOT IN PERPETUAL

CARE CEMETERY. A trustee may take and hold property transferred

to the trustee in trust in order to apply the principal,

proceeds, or income of the property for any purpose consistent

with the purpose of a corporation's perpetual care cemetery,

including:

(1) the improvement or embellishment of any part of the

perpetual care cemetery;

(2) the erection, renewal, repair, or preservation of a

monument, fence, building, or other structure in the perpetual

care cemetery;

(3) planting or cultivating plants in or around the perpetual

care cemetery; or

(4) taking special care of or embellishing a plot, section, or

building in the perpetual care cemetery.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 40, eff. Sept. 1,

1993.

SUBCHAPTER C. REGULATION AND ENFORCEMENT

Sec. 712.041. ANNUAL STATEMENT OF FUNDS. (a) A corporation

shall file in its office and with the commissioner a statement

for each perpetual care cemetery operated in this state in

duplicate that shows:

(1) the principal amount of its fund;

(2) the amount of the fund invested in bonds and other

securities;

(3) the amount of cash on hand in the fund;

(4) any other item that shows the financial condition of the

fund;

(5) the number of crypts, niches, and square feet of ground area

conveyed under perpetual care before and after March 15, 1934,

listed separately; and

(6) the number of crypts, niches, and square feet of ground area

conveyed under perpetual care after March 15, 1934, for which the

minimum deposits required for perpetual care have not been paid

to the fund.

(b) The corporation's president and secretary, or two principal

officers, shall verify the information on the statement.

(c) The corporation shall revise and post and file the statement

on or before March 1 of each year.

(d) A copy of the statement shall be available to the public

upon request.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 41, eff. Sept. 1,

1993.

Sec. 712.042. FEES. On filing a statement of funds under

Section 712.041, a corporation shall pay the commissioner a

reasonable and necessary fee set by rule adopted by the Finance

Commission of Texas under Section 712.008 to defray the cost of

administering this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1991, 72nd Leg., ch. 14, Sec. 221, eff. Sept. 1,

1991; Acts 1993, 73rd Leg., ch. 634, Sec. 42, eff. Sept. 1, 1993;

Acts 1995, 74th Leg., ch. 914, Sec. 6, eff. Sept. 1, 1995; Acts

1999, 76th Leg., ch. 62, Sec. 7.65, eff. Sept. 1, 1999; Acts

2001, 77th Leg., ch. 699, Sec. 15, eff. Sept. 1, 2001.

Sec. 712.043. ADDITIONAL FUND REPORT. The commissioner may

require, as often as the commissioner determines necessary, the

trustee of a corporation's fund to make under oath a detailed

report of the condition of the fund. The report must include:

(1) a detailed description of the assets of the fund;

(2) a description of securities held by the fund;

(3) if a security held by the fund is a lien, a description of

the property against which the lien is taken;

(4) each security's acquisition cost;

(5) each security's market value at the time of acquisition;

(6) each security's current market value;

(7) each security's status with reference to default;

(8) a statement that a security is not encumbered by debt; and

(9) any other information the commissioner determines is

pertinent.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 43, eff. Sept. 1,

1993.

Sec. 712.044. EXAMINATION OF RECORDS; EXAMINATION FEES AND

EXPENSES. (a) The commissioner may examine, annually or more

often as the commissioner reasonably considers necessary or

appropriate to protect the interest of plot owners and

efficiently administer and enforce this chapter:

(1) the books and records of a corporation relating to its fund,

including deposits to or withdrawals from the fund, income of the

fund, and uses and expenditures of that income;

(2) the books and records of a corporation relating to sales of

undeveloped mausoleum spaces and any preconstruction trust

established by the corporation as provided by Section 712.063,

including deposits to or withdrawals from the preconstruction

trust, income of the preconstruction trust, and uses and

expenditures of principal and income of the preconstruction

trust; and

(3) the consumer complaint files of a corporation relating to

the fund, sales of undeveloped mausoleum spaces, a

preconstruction trust, or to discharge of the corporation's

perpetual care responsibilities, minutes of the corporation's

board of directors, cemetery dedication statements and plat maps,

and mausoleum and lawn crypt construction contracts and

specifications.

(b) A corporation that is examined under this section shall make

the specified books and records available for examination by the

banking department upon reasonable notice to the corporation and

shall pay to the commissioner for the examination a reasonable

and necessary fee set by rules adopted by the Finance Commission

of Texas under Section 712.008 to defray:

(1) the cost of examination;

(2) the equitable or proportionate cost of maintenance and

operation of the department; and

(3) the cost of administering and enforcing this chapter.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 44, eff. Sept. 1,

1993; Acts 2001, 77th Leg., ch. 699, Sec. 16, eff. Sept. 1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

345, Sec. 2, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1290, Sec. 2, eff. September 1, 2005.

Sec. 712.0441. ENFORCEMENT. (a) After notice and opportunity

for hearing, the commissioner may impose an administrative

penalty on a person who:

(1) violates this chapter or a final order of the commissioner

or rule of the Finance Commission of Texas and does not correct

the violation before the 31st day after the date the person

receives written notice of the violation from the banking

department; or

(2) engages in a pattern of violations, as determined by the

commissioner.

(b) The amount of the penalty for each violation may not exceed

$1,000 for each day the violation occurs.

(c) In determining the amount of the penalty, the commissioner

shall consider the seriousness of the violation, the person's

history of violations, and the person's good faith in attempting

to comply with this chapter. The imposition of a penalty under

this section is subject to judicial review as a contested case

under Chapter 2001, Government Code. The commissioner may collect

the penalty in the same manner that a money judgment is enforced

in district court.

(d) In addition to any penalty that may be imposed under

Subsection (a), the commissioner may bring a civil action against

a corporation to enjoin a violation described in Subsection (a)

that has not been corrected within 30 days after the receipt by

the corporation of written notice from the commissioner of the

violation. Any such civil action may be brought in the district

court of the county in which the corporation's perpetual care

cemetery is operated.

(e) The commissioner may issue an order to cease and desist if a

violation described in Subsection (a) has not been corrected

within 30 days after the receipt by the corporation of written

notice from the commissioner of the violation. Any order proposed

under this subsection shall be served upon the corporation, shall

state the grounds for the proposed order with reasonable

certainty, and shall state the proposed effective date, which

shall not be less than 15 days after receipt by the corporation.

Unless the corporation shall request a hearing within 15 days

after such receipt, the order shall become effective as proposed.

If the corporation requests a hearing, it shall be conducted in

accordance with the procedures for a contested case hearing under

the Administrative Procedure and Texas Register Act.

(f) The commissioner may issue an order requiring restitution by

a corporation to its fund or to a preconstruction trust if, after

notice and opportunity for hearing held in accordance with the

procedures for a contested case hearing under the Administrative

Procedure and Texas Register Act, the commissioner finds that the

corporation has not made a deposit in the fund as required by

Section 712.028 or in the preconstruction trust as required by

Section 712.063.

(g) If a violation described in Subsection (a) has not been

corrected with 90 days after the receipt of written notice by the

corporation from the commissioner of the violation, the

commissioner may report the violation to the attorney general,

who shall bring suit or quo warranto proceedings for the

forfeiture of the corporation's charter and dissolution of the

corporation in the district court of any county in which its

perpetual care cemetery is operated.

(h) If a fund is misappropriated by its trustee or is not

otherwise handled as required by this chapter, the commissioner

may take action against the trustee as provided in Chapter 185,

Finance Code.

Added by Acts 1993, 73rd Leg., ch. 634, Sec. 45, eff. Sept. 1,

1993. Amended by Acts 1997, 75th Leg., ch. 769, Sec. 3, eff.

Sept. 1, 1997; Acts 1999, 76th Leg., ch. 62, Sec. 7.66, eff.

Sept. 1, 1999; Acts 2001, 77th Leg., ch. 699, Sec. 17, eff. Sept.

1, 2001.

Amended by:

Acts 2005, 79th Leg., Ch.

345, Sec. 3, eff. September 1, 2005.

Acts 2005, 79th Leg., Ch.

1290, Sec. 3, eff. September 1, 2005.

Sec. 712.0442. PATTERN OF WILFUL DISREGARD. (a) If, after a

hearing conducted as provided by Chapter 2001, Government Code,

the trier of fact finds that a violation of this chapter or a

rule of the Finance Commission of Texas establishes a pattern of

wilful disregard for the requirements of this chapter or rules of

the finance commission, the trier of fact shall recommend to the

commissioner that the maximum administrative penalty permitted

under Section 712.0441 be imposed on the person committing the

violation or that the commissioner cancel or not renew the

person's permit under Chapter 154, Finance Code, if the person

holds such a permit.

(b) For the purposes of this section, violations corrected as

provided by Section 712.0441 may be included in determining

whether a pattern of wilful disregard for the requirements of

this chapter or rules of the finance commission exists.

Added by Acts 2001, 77th Leg., ch. 699, Sec. 18, eff. Sept. 1,

2001.

Sec. 712.048. CRIMINAL PENALTIES. (a) A person who is an

individual, firm, association, corporation, or municipality, or

an officer, agent, or employee of an individual, firm,

association, corporation, or municipality, commits an offense if

the person sells, offers to sell, or advertises for sale an

interment right in a plot and, before a fund is established for

the cemetery in which the plot is located as provided by this

chapter, represents that the plot is under perpetual care. An

offense under this subsection is a Class A misdemeanor. This

subsection does not prevent an aggrieved party or the attorney

general from maintaining a civil action for the recovery of

damages caused by an injury resulting from an offense under this

subsection.

(b) A person who is an individual, firm, association,

corporation, or municipality, or an officer, agent, or employee

of an individual, firm, association, corporation, or

municipality, commits an offense if the person knowingly

defalcates or misappropriates assets of a fund. An offense under

this subsection is punishable as if it were an offense under

Section 32.45, Penal Code.

Acts 1989, 71st Leg., ch. 678, Sec. 1, eff. Sept. 1, 1989.

Amended by Acts 1993, 73rd Leg., ch. 634, Sec. 46, eff. Sept. 1,

1993.

SUBCHAPTER D. SALE OF UNDEVELOPED MAUSOLEUM SPACE

Sec. 712.061. OFFER AND SALE OF UNDEVELOPED MAUSOLEUM SPACE.

(a) A corporation may not directly or indirectly sell or offer

for sale an undeveloped mausoleum space unless before the sale or

offer the corporation:

(1) establishes a preconstruction trust as provided by Section

712.063 or executes and submits a performance bond payable to the

commissioner as provided by Section 712.067; and

(2) submits a written notice to the commissioner as required by

Subsection (b).

(b) The written notice to the commissioner must set forth:

(1) the date the corporation anticipates that sales of

undeveloped mausoleum spaces will begin;

(2) a copy of the sales contract proposed for use that complies

with Section 712.066;

(3) if the corporation establishes a preconstruction trust as

provided by Section 712.063, a copy of the executed

preconstruction trust agreement that complies with this

subchapter and identifies the preconstruction trustee;

(4) if the corporation submits a performance bond payable to the

commissioner as provided by Section 712.067, the executed,

original performance bond in the amount required by Section

712.067 and documentation supporting the corporation's

computation of that amount; and

(5) other information the commissioner reasonably requires to

properly administer and enforce this subchapter.

(c) At any time before beginning construction of the mausoleum

or mausoleum section in which undeveloped mausoleum spaces are

being sold, a corporation that has established a preconstruction

trust may substitute a performance bond that meets the

requirements of Section 712.067. On acceptance of the

performance bond by the commissioner, the corporation may

terminate and withdraw all proceeds deposited in the

preconstruction trust.

Added by Acts 2005, 79th Leg., Ch.

345, Sec. 4, eff. September 1, 2005.

Added by Acts 2005, 79th Leg., Ch.

1290, Sec. 4, eff. September 1, 2005.

Sec. 712.062. DEPOSITS TO FUND. This subchapter does not affect

the corporation's obligation to make deposits to its fund as

provided in Subchapter B.

Added by Acts 2005, 79th Leg., Ch.

345, Sec. 4, eff. September 1, 2005.

Added by Acts 2005, 79th Leg., Ch.

1290, Sec. 4, eff. September 1, 2005.

Sec. 712.063. PRECONSTRUCTION TRUST. (a) Except as provided by

Section 712.067, a corporation that intends to directly or

indirectly sell or offer for sale undeveloped mausoleum spaces

shall establish a preconstruction trust by written declaration

and agreement appointing as preconstruction trustee a financial

institution with trust powers that is located in this state.

(b) The corporation shall deposit in the preconstruction trust

an amount equal to at least 40 percent of all proceeds received

directly or indirectly from the sale of undeveloped mausoleum

spaces, not including interest, finance charges, sales taxes,

credit life insurance premiums, or deposits to the corporation's

fund required by Section 712.029(c).

(c) On application, the commissioner may authorize a corporation

to deposit less than the amount required by Subsection (b) if the

corporation demonstrates to the reasonable satisfaction of the

commissioner that:

(1) the sales projections of the corporation are prudent and

based on reasonable assumptions;

(2) the projected cost of construction is objectively determined

based on documentation similar to that required by Section

712.067(b); and

(3) the amount of money projected to be deposited in the

preconstruction trust under the proposed lesser amount will equal

or exceed 120 percent of the cost of constructing the mausoleum

or mausoleum section.

(d) The corporation shall deposit the required amount into the

preconstruction trust on or before the 30th day after the end of

the month in which payment is received. At the time of making a

deposit, the corporation shall furnish to the preconstruction

trustee the name of each payor and the amount of payment on each

account for which the deposit is being made. A contract between

the corporation and an agent or third party developer may not

restrict or waive the corporation's primary liability for making

the deposits required by this section.

(e) The preconstruction trustee may commingle deposits received

if the accounting records accurately establish a separate account

for each contract and reflect the amounts deposited and the

income and loss allocable to each contract.

(f) Money in a preconstruction trust may be invested only in:

(1) demand deposits, savings accounts, certificates of deposit,

or other accounts in financial institutions if the amounts

deposited in those accounts are fully covered by federal deposit

insurance or otherwise fully secured by a separate fund of

securities in the manner provided by Section 184.301, Finance

Code;

(2) marketable notes, bonds, evidences of indebtedness, or

obligations with a term to maturity of five years or less and:

(A) issued by the United States or an instrumentality of the

United States; or

(B) the principal and interest of which are guaranteed by the

full faith and credit of the United States; and

(3) a mutual fund the portfolio of which consists wholly of

investments permitted by Subdivisions (1) and (2).

(g) The preconstruction trustee may withdraw money from earnings

on a preconstruction trust for the purpose of paying reasonable

and necessary costs of operation of the preconstruction trust,

including trustee or depository fees and expenses, and any

special examination fees due to the department related to an

examination of the preconstruction trust that is not incidental

to examination of the corporation's fund. With the department's

prior approval, the corporation may withdraw money from earnings

on a preconstruction trust to pay any tax incurred because of the

existence of the preconstruction trust.

(h) The preconstruction trust and the preconstruction trustee

are governed by Subtitle B, Title 9, Property Code.

Added by Acts 2005, 79th Leg., Ch.

345, Sec. 4, eff. September 1, 2005.

Added by Acts 2005, 79th Leg., Ch.

1290, Sec. 4, eff. September 1, 2005.

Sec. 712.064. CONSTRUCTION; DEFAULT. (a) The corporation shall

start construction of the mausoleum or mausoleum section in which

sales or reservations for sale of undeveloped mausoleum spaces

are being made on or before a date that is 48 months after the

date of the first of those sales or reservations and shall

complete construction on or before a date that is 60 months after

the date of the first of those sales or reservations. The

commissioner may grant extensions for good cause shown.

(b) If construction of a mausoleum or mausoleum section related

to an undeveloped mausoleum space has not begun or been

completely constructed by the applicable time specified by

Subsection (a), on the written request of the buyer, the

corporation and the preconstruction trustee shall, on or before

the 30th day after the date of the buyer's request, refund the

entire amount paid for the undeveloped mausoleum space plus, if

the corporation established a preconstruction trust, net income

earned on that portion of the money deposited in the

preconstruction trust. The corporation is liable to a buyer for

any portion of the purchase price paid for undeveloped mausoleum

spaces that was not deposited in the preconstruction trust.

Added by Acts 2005, 79th Leg., Ch.

345, Sec. 4, eff. September 1, 2005.

Added by Acts 2005, 79th Leg., Ch.

1290, Sec. 4, eff. September 1, 2005.

Sec. 712.065. RELEASE OF TRUST FUNDS TO CORPORATION. (a) On

completion of construction of a mausoleum or mausoleum section

subject to this subchapter, the corporation may withdraw all

money deposited in the preconstruction trust and the net income

earned on the money after submitting to the preconstruction

trustee a sworn affidavit of completion executed by an officer or

agent of the corporation on a form prescribed by the department.

(b) During construction of the mausoleum or mausoleum section

containing the undeveloped mausoleum spaces, the corporation may

periodically withdraw from the preconstruction trust an amount

equal to the previously unreimbursed cost of performed labor or

delivered materials after submitting to the preconstruction

trustee a sworn affidavit of expenditures for construction cost

executed by an officer or agent of the corporation on a form

prescribed by the department.

(c) If the corporation delivers a completed mausoleum space

acceptable to the buyer in lieu of the undeveloped mausoleum

space purchased, the corporation may withdraw all money deposited

to the preconstruction trust for that buyer and related income

earned on the money after submitting to the preconstruction

trustee a sworn affidavit of performance executed by an officer

or agent of the corporation on a form prescribed by the

department.

(d) The corporation shall maintain copies of the affidavits

required by this section for examination by the department.

Added by Acts 2005, 79th Leg., Ch.

345, Sec. 4, eff. September 1, 2005.

Added by Acts 2005, 79th Leg., Ch.

1290, Sec. 4, eff. September 1, 2005.

Sec. 712.066. CONTRACT DISCLOSURES. (a) A sales contract for

an undeveloped mausoleum space, whether in English or Spanish,

must inform the buyer:

(1) that the buyer by written notice may cancel the contract for

the failure of the corporation or its agent or contractor to

construct the mausoleum or mausoleum section containing the

undeveloped mausoleum space within the time limits specified by

Section 712.064(a) and receive a refund of the entire amount paid

under the contract for the undeveloped mausoleum space plus, if

the corporation established a preconstruction trust, net income

earned on that portion of the money deposited in the

preconstruction trust, as provided by Section 712.064(b);

(2) of the options available under a fully paid contract in the

event that the person to be interred in the undeveloped mausoleum

space dies before completion of the related mausoleum or

mausoleum section, which may include an option to:

(A) select a replacement mausoleum space or other interment that

is acceptable to the buyer or buyer's representative; or

(B) elect temporary interment of the human remains or cremated

remains in an existing mausoleum space until the undeveloped

mausoleum space is completed, at which time the corporation shall

disinter and reinter the human remains or cremated remains at no

additional charge; and

(3) if the corporation does not offer a temporary interment

option and the buyer does not accept a replacement mausoleum

space or other interment, that the buyer or the buyer's

representative by written notice may cancel the contract and

receive a refund of the entire amount paid under the contract for

the undeveloped mausoleum space plus, if the corporation

established a preconstruction trust, net income earned on that

portion of the money deposited in the preconstruction trust, as

provided by Section 712.064(b).

(b) A corporation's sales contract for undeveloped mausoleum

space must comply with applicable regulations of the Federal

Trade Commission, including 16 C.F.R. Section 433.2, with respect

to a contract payable in installments.

(c) Required notices to buyers must be written in plain language

designed to be easily understood by the average consumer and be

printed in an easily readable font and type size.

Added by Acts 2005, 79th Leg., Ch.

345, Sec. 4, eff. September 1, 2005.

Added by Acts 2005, 79th Leg., Ch.

1290, Sec. 4, eff. September 1, 2005.

Sec. 712.067. BOND IN LIEU OF PRECONSTRUCTION TRUST. (a) In

lieu of establishing the preconstruction trust required by

Section 712.063, a corporation may execute and submit a bond

issued by a surety company authorized to do business in this

state and reasonably acceptable to the commissioner. The bond

must be payable to the commissioner and conditioned on the

faithful performance of the contracts for sale of undeveloped

mausoleum spaces.

(b) The amount of the bond must equal or exceed 120 percent of

the cost of construction of the related mausoleum or mausoleum

section. The cost of construction of the mausoleum or mausoleum

section must be based on:

(1) estimates of the design architect and two or more bids for

the construction from qualified contractors authorized to do

business in this state;

(2) the actual cost of construction set forth in an executed

contract with a qualified contractor authorized to do business in

this state; or

(3) if the corporation intends to construct the mausoleum or

mausoleum section itself, an amount equal to 120 percent of the

estimated cost of construction, including direct and allocated

labor and material costs.

(c) At any time before beginning construction of the mausoleum

or mausoleum section in which undeveloped mausoleum spaces are

being sold, a corporation that has submitted a performance bond

may establish a preconstruction trust that meets the requirements

of Section 712.063. On acceptance of the substituted

preconstruction trust by the commissioner, the corporation may

terminate and withdraw the previously submitted performance bond.

Added by Acts 2005, 79th Leg., Ch.

345, Sec. 4, eff. September 1, 2005.

Added by Acts 2005, 79th Leg., Ch.

1290, Sec. 4, eff. September 1, 2005.

Sec. 712.068. REPORTS. On or before the date the corporation's

annual statement of funds is due as required by Section 712.041,

the corporation shall cause the preconstruction trustee to file

with the department, in the form prescribed by the department, a

full and true statement regarding the activities of any

preconstruction trust that was subject to this subchapter at any

time during the preceding calendar year.

Added by Acts 2005, 79th Leg., Ch.

345, Sec. 4, eff. September 1, 2005.

Added by Acts 2005, 79th Leg., Ch.

1290, Sec. 4, eff. September 1, 2005.