NORTH CAROLINA GENERAL ASSEMBLY

1975 SESSION

 

 

CHAPTER 768

SENATE BILL 760

 

 

AN ACT TO REGULATE CEMETERIES OPERATED FOR PRIVATE GAIN.

 

The General Assembly of North Carolina enacts:

 

Section 1.  Article 7 of Chapter 65 of the General Statutes is hereby rewritten to read as follows:

"§ 65-18.  Short title. — This Article 7 may be cited as 'North Carolina Cemetery Act'.

"§ 65-19.  Scope. — (1) The provisions of this Article shall apply to all persons engaged in the business of operating a cemetery as defined herein, except cemeteries owned and operated by governmental agencies or churches.

(2)        Any cemetery beneficially owned and operated by a fraternal organization or its corporate agent for at least 50 years prior to the effective date of this Article shall be exempt from the provisions of Article 7 of this Chapter.

"§ 65-20.  Definitions; North Carolina Cemetery Act. — As used in this Article, unless otherwise stated or unless the context or subject matter clearly indicates otherwise:

(1)        'Person' means an individual, corporation, partnership, joint venture, or association.

(2)        'Human remains' or 'remains' means the bodies of deceased persons, and includes the bodies in any stage of decomposition, and cremated remains.

(3)        'Cemetery' means any one or a combination of more than one of the following in a place used or to be used and dedicated or designated for cemetery purposes:

(a)        A burial park, for earth interment.

(b)        A mausoleum.

(c)        A columbarium.

(4)        'Mausoleum' means a structure or building substantially exposed aboveground intended to be used for the entombment of remains of a deceased person.

(5)        'Columbarium' means a structure or building substantially exposed aboveground intended to be used for the interment of the cremated remains of a deceased person.

(6)        'Cemetery company' means any legal entity that owns or controls cemeterylands or property and conducts the business of a cemetery, including all cemeteries owned and operated by governmental agencies, churches and organizations or the corporate agents for the duration of any sales and management contracts entered into with cemetery sales organizations of cemetery management organizations for cemetery purposes, or with any other legal entity other than direct employees of said governmental agency, church or fraternal organization.

(7)        'Grave space' means a space of ground in a cemetery intended to be used for the interment in the ground of the remains of a deceased person.

(8)        'Commission' means the North Carolina Cemetery Commission.

(9)        'Cemetery sales organization' means any legal entity contracting as an independent contractor with a cemetery company to conduct sales of cemetery products but does not mean individual salesmen or sales managers employed by and contracting directly with cemetery companies operating under this act, nor does it mean funeral establishments or funeral directors operating under licenses authorized by G.S. 90-210.10 when dealing directly with a cemetery company and with members of the family of a deceased person or other persons authorized by law to arrange for the burial and funeral of such deceased human being or with an individual negotiating the sale of cemetery property as a part of his or her pre-need arrangements under G.S. 65-36.1 through G.S. 65-36.8.

(10)      'Cemetery management organization' means any legal entity contracting as an independent contractor with a cemetery company to manage a cemetery but does not mean individual managers employed by and contracting directly with cemetery companies operating under this act.

(11)      'Cemetery broker' means a legal entity engaged in the business of arranging sales of cemetery products between legal entities and which sale does not involve a cemetery company, but does not mean funeral establishments or funeral directors operating under G.S. 90-210.10, when dealing between legal entities wherein one such entity shall be members of the family of a deceased person or other persons authorized by law to arrange for the burial and funeral of such deceased human being or shall be an individual negotiating the sale of cemetery property as a part of his or her pre-need arrangements under G.S. 65-36.1 through G.S. 65-36.8. The North Carolina Cemetery Act shall not apply to any cemetery broker selling less than five grave spaces per year.

(12)      'Belowground crypts' consists of an interment space in pre-placed chambers, either side by side or multiple depth, covered by earth and sod and are also known as lawn crypts, westminsters or turf top crypts.

(12 1/2)      'Vault' means a crypt or underground receptacle which is used tor interment in the ground and which is designed to encase and protect caskets or similar burial devices. For the purposes of this act, a vault is a pre-need item until delivery to the purchaser.

(13)      'Bank of belowground crypts' means any construction unit of belowground crypts acceptable to the commission which a cemetery uses to initiate its belowground crypt program or to add to existing belowground crypt structures.

(14)      'Mausoleum section' means any construction unit of a mausoleum acceptable to the commission which a cemetery uses to initiate its mausoleum program or to add to its existing mausoleum structures.

"§ 65-21.  The North Carolina Cemetery Commission. — There is hereby established in the Department of Commerce a North Carolina Cemetery Commission with the power and duty to adopt rules and regulations to be followed in the enforcement of this Article.

"§ 65-21.1.  Cemetery Commission: members, selection, quorum. — The Cemetery Commission shall consist of seven members appointed by the Governor. Two members shall be owners or managers of cemeteries in North Carolina. Three members shall be selected from six nominees submitted by the North Carolina Cemetery Association. Two members shall be public members who have no financial interest in, and are not involved in management of, any cemetery or funeral related business. Four members of the initial commission shall be appointed for a term to expire June 30, 1977, and three members shall be appointed for a term to expire June 30, 1976. At the end of the respective terms of office of the initial members of the commission, their successors shall be nominated in the same manner, selected from the same categories and appointed for terms of four years and until their successors are appointed and qualified. Any appointment to fill a vacancy on the commission created by the resignation, dismissal, death or disability of a member shall be for the balance of the unexpired term.

The Governor shall have the power to remove any member of the commission from office for misfeasance, malfeasance and nonfeasance according to the provisions of Section 13 of the Executive Organization Act of 1973.

A majority of the commission shall constitute a quorum for the transaction of business.

At the first meeting of the commission held after the effective date of this act, the commission shall elect one of its members as its chairman and another as its vice-chairman, both to serve through June 30 of the next following year. Thereafter, at its first meeting held on or after July 1 of each year, the commission shall elect from its members a chairman and vice-chairman to serve through June 30 of the next following year.

"§ 65-21.2.  Principal office. — The principal office of the commission shall be in the City of Raleigh, North Carolina. Notice of all regular and special meetings of the commission shall be advertised 10 or more days in advance in at least three newspapers in North Carolina having inter-county circulation in the State. Each member of the commission shall receive per diem and allowances in accordance with G.S. 138-5. The administrator of the commission, other employees required to attend and legal counsel to the commission shall be entitled to actual expenses while attending regular or special meetings of the commission held other than in Raleigh, North Carolina. All expenses of the commission shall be paid from funds coming to the commission pursuant to this Article.

"§ 65-21.3.  Regular and special meetings. — The Cemetery Commission shall meet at least once in each quarter and may hold special meetings at any time and place within the State at the call of the chairman or upon the written request of at least four members.

"§ 65-21.4.  Powers. — In addition to other powers conferred by this act, the Cemetery Commission shall have the following powers and duties:

(a)        The administrator shall be appointed by the Governor upon recommendation of the Cemetery Commission. The Cemetery Commission shall set the compensation of the administrator and such other personnel as are necessary to operate the commission.

(b)        Prior to the change of control of any cemetery company, an examination of the licensee's records may be required, and if so, the fees provided in subsection (c) hereof would apply thereto.

(c)        Investigate, upon its own initiative, or upon a verified complaint in writing, the actions of any person engaged in the business or acting in the capacity of a licensee under this Article. The license of a licensee may be revoked or suspended for a period not exceeding two years, or until compliance with a lawful order imposed in the final order of suspension, or both, upon a finding of fact showing that the licensee has either failed to:

(1)        Pay the fees required herein;

(2)        Make any reports required by this act;

(3)        Remit to the care and maintenance fund the required amounts; or

(4)        Abide by any other regulations promulgated by the commission.

(d)        In all proceedings under this Article for the revocation or suspension of licenses, the provisions of Chapter 150 of the General Statutes shall be applicable.

(e)        At such time as the commission finds it necessary it may bring an action in the name of the State in the court of the county in which the licensed place of business is located against such person to enjoin such person from engaging in or continuing such violation or doing any act or acts in furtherance thereof. In any such action, an order or judgment may be entered awarding such temporary or permanent injunction as may be deemed proper; provided, that before any such action is brought the commission shall give the cemetery at least 20 days' notice in writing, stating the alleged violation and giving the cemetery an opportunity within the 20-day period to cure the violation. In addition to all other means provided by law for the enforcement of a temporary restraining order, temporary injunction, or permanent injunction, the court shall have the power and jurisdiction to impound and to appoint a receiver for the property and business of the defendant, including books, papers, documents, and records appertaining thereto or so much thereof as the court may deem reasonably necessary to prevent further violation of this Article through or by means of the use of said property and business. The commission may institute proceedings against the cemetery or its officers, where after an examination, pursuant to this Article, a shortage in the care and maintenance trust fund is discovered, to recover said shortage.

"§ 65-21.5.  Annual budget of commission; collection of funds for operation. — The commission shall prepare an annual budget and shall collect the sums of money required for this budget from yearly fees and any other sources provided in this Article. On or before July 1 of each year, each licensed cemetery will pay a license fee of one hundred dollars ($100.00) per year; and in addition, a fee for each grave space, niche, mausoleum crypt deeded, and pre-need cemetery merchandise contract for vaults, belowground crypts, and memorials, to be set by the commission each year in order to defray the expenses of the commission as set forth in the budget.

"§ 65-22.  License: cemetery company. — (1) No legal entity shall engage in the business of operating a cemetery company except as authorized by this Article and without first obtaining a license from the commission.

(2)        Any legal entity wishing to establish a cemetery shall file a written application for authority with the commission on forms provided by the commission.

(3)        Upon receipt of the application and filing fee of four hundred dollars ($400.00), the commission shall cause an investigation to be made to establish the following criteria for approval of such application:

(a)        The creation of a legal entity to conduct cemetery business, and the proposed financial structure.

(b)        A perpetual care trust fund agreement, with an initial deposit of not less than fifteen thousand dollars ($15,000) and with bank cashier's check or certified check attached for such amount and payable to such trustee, with said trust executed by applicant and accepted by the trustee, conditioned only upon whether the application is approved.

(c)        A plat of the land to be used for a cemetery, showing county, city and/or township, and names of roads and access streets or ways.

(d)        Designation by the legal entity wishing to establish a cemetery of a general manager who shall be a person of good moral character, having had no less than one year's experience in cemeteries.

(e)        Development plans sufficient to insure the community that the cemetery will provide adequate cemetery services, and the property is suitable for use as a cemetery.

(4)        The commission, after receipt of the investigating report, shall grant or refuse to grant the authority to organize a cemetery.

(5)        If the commission intends to deny an application, it shall give written notice to the applicant of its intention to deny. The notice shall state a time and a place for a hearing before the commission and a summary statement of the reasons for the proposed denial. The notice of intent shall be mailed by certified mail to the applicant at the address stated in the application at least 15 days prior to the scheduled hearing date. The applicant shall pay the costs of this hearing as assessed by the commission unless the applicant notifies the commission by certified mail at least five days prior to the scheduled hearing date that a hearing is waived. Any appeals from the commission's decision shall be to the court having jurisdiction of the applicant or the commission.

(6)        If the commission intends to grant the authority, it shall give written notice that the authority to organize a cemetery has been granted and that a license to operate will be issued upon the completion of the following:

(a)        Establishment of the care and maintenance trust fund and receipt by the commission of a certificate from the trust company, certifying receipt of the initial deposit required under this Article.

(b)        Full development, ready for burial, of not less than two acres including a completed paved road from a public roadway to said developed section, certified by inspection of the commission or its representative.

(c)        A description, by metes and bounds, of the acreage tract of such proposed cemetery, together with evidence, by title insurance policy or by certificate of an attorney-at-law, certifying that the applicant is the owner in fee simple of such tract of land, which must contain not less than 30 acres, and that the title to not less than 30 acres is free and clear of all encumbrances. In counties with a population of less than 35,000 population according to the latest federal decennial census the tract need be only 15 acres.

(d)        A plat of the cemetery showing the number and location of all lots surveyed and permanently staked for sale.

"§ 65-22.2.  Existing companies; effect of this Article 7. — Existing cemetery companies at the time of the adoption of this Chapter shall continue in full force and effect and be granted a license but shall hereafter be operated in accordance with the provisions of Article 7 of this Chapter.

"§ 65-23.  License; sales organization, management organization, broker. — (1) No legal entity shall engage in the business of a cemetery sales organization, a cemetery management organization or a cemetery broker except as authorized by this Article, and without first obtaining a license from the commission.

(2)        Any legal entity wishing to establish and operate the business of a cemetery sales organization, a cemetery management organization or a cemetery broker shall file a written application for authority with the commission on forms provided by the commission which must contain such of the following documents and information as may be required by the commission:

(a)        The appointment of a North Carolina resident to receive service of any lawful process in any noncriminal proceedings arising under this Chapter against the applicant, its principal owners, principal stockholders, directors and general manager or their personal representatives.

(b)        The states or other jurisdictions in which the applicant presently is conducting the business activity applied for or other similar businesses and any adverse order, judgment or decree entered against the applicant in each jurisdiction or by any court.

(c)        The applicant's name, address and the form, date and jurisdiction of the organization and the address of each of its offices within or without this State.

(d)        The name, address, principal occupation for the past five years of every director and officer of the applicant or person occupying a similar status or performing similar functions.

(e)        Copies of the articles of incorporation or articles of partnership or joint venture agreement or other instrument establishing the legal entity of the applicant.

(3)        The application shall be accompanied by an initial filing fee of four hundred dollars ($400.00) for cemetery sales organization and cemetery management organization and an initial filing fee of two hundred dollars ($200.00) for a cemetery broker. If ninety percent (90%) or more of the applicant is owned by an existing cemetery company operating under the North Carolina Cemetery Act, then the initial filing fee shall be one-half of the sums set out herein.

(4)        Upon receipt of the application and filing fee, the commission shall cause an investigation to be made of the legal entity to conduct the business applied for and the qualification of said legal entity to do business in North Carolina.

(5)        The commission, after receipt of the investigation report, shall grant or refuse to grant the authority to organize the organization applied for.

(6)        If the commission intends to deny an application, it shall give written notice to the applicant of its intention to deny. The notice shall state a time and a place for hearing before the commission and a summary statement of the reasons for the proposed denial. The notice of intent shall be mailed by certified mail to the applicant at the address stated in the application at least 15 days prior to the scheduled hearing date. Any appeals from the commission's decision shall be to the court having jurisdiction of the applicant, or in the event of an out-of-state applicant, then to the court having jurisdiction of the commission.

(7)        If the commission intends to grant the authority, it shall give written notice that the authority to organize the business applied for has been granted and that a license to operate will be issued upon presentment to the commission of a statement of employment between the applicant and the cemetery or cemeteries to be serviced thereby.

(8)        Any person or any cemetery sales organization or any cemetery management organization or any cemetery broker violating the provisions of this section is guilty of a misdemeanor, punishable as provided in Section 14-3 and shall be subject to revocation of the license to operate.

"§ 65-24.  Licenses for persons selling pre-need grave space. — (1) No person shall offer to sell pre-need grave spaces, mausoleum crypts, niches, memorials, vaults or any other pre-need cemetery merchandise or services under any plan authorized for any cemetery, cemetery sales group, or cemetery management group, before obtaining a license from the commission.

(2)        Persons wishing to obtain a license shall file a written application with the commission on forms provided by the commission. The commission may require such information and documents as it deems necessary to protect the public interest.

(3)        The application shall be accompanied by a filing fee of fifteen dollars ($15.00) to cover the expenses of processing and investigation. After processing and investigation the commission shall grant, or refuse to grant, the license applied for. The annual license fee shall be sent by the commission but shall not exceed ten dollars ($10.00).

(4)        If the commission refuses to grant the license applied for, it shall give written notice to the applicant. The notice shall state a time and a place for hearing before the commission, and a summary statement of the reasons for the refusal to grant the license. The notice shall be mailed by registered mail or certified mail to the applicant at the address stated in the application at least 30 days prior to the scheduled hearing date.

(5)        If the commission intends to grant the license, it shall give written notice that the license will be issued upon presentment to the commission of a duly executed statement of employment between the applicant and the cemetery or cemeteries to be serviced thereby.

(6)        The provisions of Article 4 of Chapter 150A of the General Statutes of North Carolina relating to 'Judicial Review' shall apply to appeals or petitions for judicial review by any person or persons aggrieved by an order or decision of the commission.

(7)        The provisions of this Article 7 shall not apply to persons holding a certificate under G.S. 65-36.1 through G.S. 65-36.8.

"§ 65-25.  Application for change of control; filing fee. — In any case where a person, a group of persons, or a corporation proposes to purchase or acquire control of an existing cemetery company either by purchasing the outstanding capital stock of any cemetery company, or the interest of the owner or owners, and thereby to change the control of said cemetery company, such person shall first make application on form supplied by the commission for a certificate of approval of such proposed change of control of said cemetery company. The application shall contain the name and address of the proposed new owners and the said commission shall issue said certificate of approval only after it has become satisfied that the proposed new owners are qualified by character, experience and financial responsibility to control and operate the said cemetery in a legal and proper manner, and that the interest of the public generally will not be jeopardized by the proposed change in ownership and management. Such application for a purchase or change of control must be completed and accompanied by an initial filing fee of one hundred dollars ($100.00) to cover examination provided in G.S. 65‑21.4(b) if required, and if records are in order, certificate of approval shall be issued.

"§ 65-26.  Records. — A record shall be kept of every burial in the cemetery of a cemetery company, showing the date of burial, name of the person buried, together with lot, plot, and space in which such burial was made therein. All sales, trust funds, accounting records, and all other records of the licensee shall be available at the licensee's principal place of business in this State and shall be readily available at all reasonable times for examination by an authorized representative of the commission.

"§ 65-27.  Required trust fund for care and maintenance; remedy of commission for noncompliance. — No cemetery company shall be permitted to establish, or operate if already established, a cemetery without providing for the future care and maintenance of such cemetery, for which a trust fund shall be established to be known as 'the care and maintenance trust fund of (here use name of licensee)'. If any cemetery company refuses or otherwise fails to provide or maintain an adequate care and maintenance trust fund in accordance with the provisions of this act, the commission, after reasonable notice, shall proceed to enforce compliance under the powers vested in it under this act; provided any nonprofit cemetery corporation, incorporated and engaged in the cemetery business continuously since and prior to 1915 and whose current trust assets exceed seven hundred fifty thousand dollars ($750,000) shall not be required to designate a corporate trustee. The trust fund agreement shall contain and include the following: name, location, and address of both the licensee and the trustee showing the date of agreement together with the amounts required deposited as stated in this Article. No person shall withdraw or transfer any portion of the corpus of the care and maintenance trust fund without first obtaining written consent from the commission.

"§ 65-27.1.  Individual contracts for care and maintenance. — At the time of making a sale or receiving the initial deposit hereunder, the cemetery company shall deliver to the person to whom such sale is made, or who makes such deposit, an instrument in writing which shall specifically state that the net income of the care and maintenance trust fund shall be used solely for the care and maintenance of the cemetery, for reasonable costs of administering such care and maintenance and for reasonable costs of administering the trust fund.

"§ 65-27.2.  Requirements for advertising of perpetual care fund. — No such cemetery shall hereafter cause or permit advertising of perpetual care fund in connection with the sale or offer for sale of its property unless the amount deposited in said funds shall be equal to not less than twenty dollars ($20.00) per grave space and niche and forty dollars ($40.00) per mausoleum crypt sold, said sum to be deposited in perpetual care fund as provided in G.S. 65-27 except as provided in G.S. 65-27.3.

"§ 65-27.3.  Disposition of deposits when perpetual care fund amounts to $150,000. — When the amount deposited in the perpetual care fund required by this Article of any cemetery heretofore or hereafter established shall amount to one hundred fifty thousand dollars ($150,000), anything in this Article to the contrary notwithstanding, the cemetery may make all deposits thereafter either into the original Perpetual Care Trust Fund or into a separate fund which shall be an irrevocable trust and designated as Perpetual Care Trust Fund 'A' and invested by trustee as directed by the cemetery, but may not be invested in another cemetery, and said deposits shall be not less than twenty dollars ($20.00) per grave space.

For special endowments for a specific lot, grave, or a family mausoleum, memorial, marker, or monument, the cemetery may set aside the full amounts received for this individual special care in a separate trust or by a deposit to a savings account in a bank or savings and loan association located within and authorized to do business in the State, provided, however, if the licensee does not set up a separate trust or savings account for the special endowment the full amount thereof shall be deposited in Perpetual Care Trust Fund 'A'.

Deposits to the care and maintenance trust fund must be made by the cemetery company holding title to the subject cemetery lands not later than 10 days following the close of the calendar month in which payments were received as provided herein; however, the entire amount required to be deposited into the fund shall be paid within four years from the date of any contract requiring such payment regardless of whether all amounts have been received by the cemetery company. The care and maintenance trust fund shall be invested and reinvested by the trustee in the same manner as provided by law for the investment of other trust funds by the clerk of the superior court. The fees and other expenses of the trust fund shall be paid by the trustee from the net income thereof and may not be paid from the corpus. To the extent that the said net income is not sufficient to pay such fees and other expenses, the same shall be paid by the cemetery company.

When a municipal, church-owned or fraternal cemetery converts to a private cemetery as defined in Section 65-20, North Carolina General Statutes, then said cemetery shall establish and maintain a care and maintenance trust fund pursuant to this section; provided, however, the initial deposit for establishment of this trust fund shall be an amount equal to ten dollars ($10.00) per space for all spaces either previously sold or contracted for sale in said cemetery at the time of conversion or twenty-five thousand dollars ($25,000), whichever sum is greater.

Each cemetery hereinafter established shall create a care and maintenance trust fund depositing therein an initial deposit of not less than fifteen thousand dollars ($15,000) and submit proof thereof to the commission prior to offering for sale any burial rights in grave spaces, niches or crypts.

In each sales contract, reservation or agreement wherein burial rights are priced separately, the purchase price of said burial rights shall be the only item subject to care and maintenance trust fund deposits; but if the burial rights are not priced separately therein, the full amount of the contract, reservations or agreement shall be subject to care and maintenance trust fund deposits as 1084 provided herein, unless the purchase price of said burial rights can be determined from the accounting records of the cemetery company.

"§ 65-27.4.  Trust fund; financial reports. — Within 60 days after the end of the calendar or fiscal year of the cemetery company, the trustee shall furnish adequate financial reports with respect to the care fund on forms provided by the commission. However, the commission may require the trustee to make such additional financial reports as it may deem advisable.

"§ 65-28.  Receipts from sale of personal property or services; trust fund; penalties. — (1) It shall be deemed contrary to public policy if any person or legal entity receives, holds, controls or manages funds or proceeds received from the sale of, or from a contract to sell, personal property or services which may be used in a cemetery in connection with the burial of or the commemoration of the memory of a deceased human being; where payments for the same are made either outright or on an installment basis prior to the demise of the person or persons so purchasing them, or for whom they are so purchased, unless such person or legal entity holds, controls or manages said funds, subject to the limitations and regulations prescribed in this section. This section shall apply to all cemetery companies or other legal entities licensed under this Chapter that offer for sale or sell personal property or services which may be used in a cemetery in connection with the burial of, or the commemoration of the memory of, a deceased human being, but shall exclude persons holding a certificate under Sections 65-36.1 through 65‑36.8, North Carolina General Statutes.

(2)        Any cemetery company or other entity entering into a contract for the sale of personal property or services, to be used in a cemetery in connection with disposing of, or commemorating the memory of, a deceased human being wherein the use of the personal property or the furnishing of the services is not immediately requested or required, shall deposit proceeds received on the contract as follows:

(a)        Into a trust fund administered by a corporate trustee in accordance with a written trust instrument.

(b)        Seventy-five percent (75%) of all proceeds received on such contracts shall be deposited until the amount deposited equals seventy-five percent (75%) of the actual sale price of the property or services so sold.

(c)        The deposit herein required shall be made into the trust fund so established on or before the tenth day of the month following receipt by the cemetery company or other entity from the purchaser.

(d)        Each deposit into any such trust fund shall be identified by the cemetery company or other entity by furnishing the trustee with the name of the purchaser, the amount of the actual sales price and the amount of money required to be deposited, and with the initial deposit a statement of or a copy of the contract for the personal property and services to be furnished by the cemetery company thereunder. Nothing herein contained shall prohibit the trustee from commingling the deposits in any such trust fund for purposes of the management thereof and the investment of funds therein.

(e)        The trust shall be operated in conformity with Chapter 36, North Carolina General Statutes, with respect to the nature and character of the trustee.

(f)         In lieu of the deposits required herein, the cemetery company or other entity may post with the commission a good and sufficient performance bond by surety company licensed to do business in North Carolina and in an amount sufficient to cover all payments made by purchasers who have not received the purchased property and services.

(3)        (a)        The funds shall be held in trust both as to principal and income earned thereon and shall remain intact, except that the cost of the operation of the trust may be deducted from the income earned thereon, until delivery of the property is made or the services are performed by the cemetery company or other entity. Upon delivery of the property or performance of the services, the cemetery company or other entity and the purchaser shall certify same to the trustee. Upon such certification, the amount of money on deposit to the credit of that particular contract, including principal and income earned thereon, shall be forthwith paid to the cemetery company or other entity. The trustee may rely upon all such certifications herein required to be made and shall not be liable to anyone for such reliance.

(b)        If for any reason a cemetery company or other entity who has entered into a contract for the sale of personal property or services cannot or does not provide the personal property or perform the services called for by the contract after request in writing to do so, the purchaser or his heirs or assigns or duly authorized representative shall be entitled to receive the entire amount paid on the contract and any income, if any, earned thereon by the trust fund.

(4)        At any time prior to delivery of personal property or performance of services, a purchaser may make written demand for a refund of the amount deposited in trust to the credit of such purchaser, and within 30 days of receipt of such written demand the trustee shall refund to such purchaser the amount on deposit to his credit together with all interest, dividends, increases or accretions earned on such fund.

(5)        Every year after the effective date of this act the trustee shall, within 75 days after the end of the calendar year, file a financial report of the merchandise trust fund with the commission, setting forth the principal thereof, the investments and payments made, and the income earned and disbursed; provided, however, that the commission may require the trustee to make such additional financial reports as it may deem advisable.

(6)        The commission shall have the power and is required from time to time as it may deem necessary to examine the business of any cemetery company or other entity writing contracts for the sale of the property or services as herein contemplated. The written report of such examination shall be filed in the office of the commission. Any persons or entities being examined shall produce the records of the company needed for such examination.

(7)        Any provision of any contract for the sale of the personal property or the performance of services herein contemplated under which the purchaser or beneficiary waives any of the provisions of this section shall be void.

(8)        Any cemetery company or other entity, as defined in this section, failing to make required contributions to the trust fund shall be guilty of a misdemeanor punishable as provided in G.S. 14-3, and each violation of this section shall constitute a separate offense.

(9)        Nothing in G.S. 65-28 and subsections thereunder shall apply to persons or legal entities holding licenses or certificates under G.S. 65-36.1 and G.S. 65-36.8 when performing services or selling items authorized by said sections.

(10)      If any report is not received within the time stipulated herein, the commission may levy and collect a penalty of twenty-five dollars ($25.00) per day for each day of delinquency.

"§ 65-29.  Applications for license. — Applications for renewal license must be submitted on or before July 1 each and every year in the case of an existing cemetery company. Before any sale of cemetery property in the case of a new cemetery company or a change of ownership or control as indicated in G.S. 65-25, an application for license must be submitted and license issued.

"§ 65-29.1.  License not assignable or transferable. — No license issued under G.S. 65-29 shall be transferable or assignable and no licensee shall develop or operate any cemetery authorized by this act under any name or at any location other than that contained in the application for such license.

"§ 65-30.  Minimum acreage; sale or disposition of cemetery lands. — (1) Each licensee shall set aside a minimum of 30 acres of land for use by said licensee as a cemetery, and shall not sell, mortgage, lease or encumber the same.

(2)        The fee simple title, or lesser estate, in any lands owned by licensee and dedicated for use by it as a cemetery, which are contiguous, adjoining, or adjacent to the minimum of 30 acres described in subsection (1), may be sold, conveyed, or disposed of, or any part thereof, by the licensee, for use by the new owner for other purposes than as a cemetery; provided that no bodies have been previously interred therein; and provided further, that any and all titles, interests, or burial rights which may have been sold or contracted to be sold in such lands which are the subject of such sale shall be conveyed to and revested in the licensee prior to consummation of any such sale, conveyance or disposition.

(3)        Any licensee may convey and transfer to a municipality or county its real and personal property together with moneys deposited with the trustee; provided said municipality or county will accept responsibility for maintenance thereof and prior written approval of the commission is first obtained.

(4)        The provisions of subsections (1) and (2) relating to a requirement for minimum acreage shall not apply to those cemeteries licensed by the commission on or before July 1, 1967, which own or control a total of less than 30 acres of land; provided that such cemeteries shall not dispose of any of such lands.

"§ 65-31.  Construction of mausoleums and belowground crypts; trust fund for receipts from sale of preconstruction crypts; compliance requirement. — (1) A cemetery company shall be required to start construction of that section of a mausoleum or bank of belowground crypts in which sales, contracts for sale, reservations for sales or agreements for sales are being made, within 48 months after the date of the first such sale. The construction of such mausoleum section or bank of belowground crypts shall be completed within five years after the date of the first sale made; provided, however, extensions for completion, not to exceed one year, may be granted by the commission for good reasons shown if a section of a mausoleum or a bank of belowground crypts shall contain more than 500 crypts.

(2)        A cemetery company which plans to offer for sale space in a section of a mausoleum or bank of underground crypts prior to its construction shall establish a preconstruction trust fund by written instrument and administered by a corporate trustee and operated in conformity with G.S. 65-28. This preconstruction fund shall be exclusive of the merchandise trust fund provided for in G.S. 65-28 of this Chapter or such other trust funds that may be required by law. The personal representative of any purchaser of such space who dies before completion of construction shall be entitled to a refund of all monies paid for such space including any income earned thereon.

(3)        Before a sale, contract for sale, reservation for sale or agreement for sale in the first mausoleum section or bank of underground crypts in each cemetery may be made the funds (one hundred twenty percent (120%) of construction cost) to be deposited to the preconstruction trust fund shall be computed as to said section or bank of crypts and such fund payments must be made within 30 days of receipt by the cemetery company or its agent of each payment. The fund portion of each such payment shall be computed by dividing the cost of the project plus twenty percent (20%) of said cost, as computed by a licensed contractor, engineer or architect by the number of crypts in the section or bank of crypts to ascertain the cost per unit. The unit cost shall be divided by the contract sales price of each unit to obtain a percentage which shall be multiplied by the amount of each payment. The formula shall be computed as follows: Cost plus 20 percent = Cost per unit Number of crypts Cost per unit = Percentage Contract sales price Percentage x payment received = Deposit required to preconstruction fund.

(4)        Upon completion of the mausoleum section or bank of underground crypts the cemetery company shall certify same to the trustee and shall be entitled to withdraw all funds deposited to the account thereof.

(5)        If said mausoleum section or bank of underground crypts is not completed within the time limits set out in this section the trustee shall contract for and cause said project to be completed and paid therefor from the trust funds deposited to the project's account paying any balance, less cost and expenses, to the cemetery company.

(6)        In lieu of the payments outlined hereunder to the preconstruction fund the cemetery company may deliver to the commission a good and sufficient completion or performance bond in an amount and by surety companies acceptable to the commission.

"§ 65-32.  Penalties. — (1) A person violating any provisions of this Article, or order or rule promulgated under the provisions thereof, or of any license issued by the commission, shall be guilty of a misdemeanor and fined and imprisoned, or both, in the discretion of the court.

(2)        The officers and directors or persons occupying similar status or performing similar functions of any cemetery company, cemetery sales organization, cemetery management organization or cemetery broker, as defined in this Chapter, failing to make required contributions to the care and maintenance trust fund and any other trust fund or escrow account provided herein, shall be guilty of a misdemeanor, and upon conviction thereof shall be punished in the manner prescribed by law.

"§ 65-33.  Burial without regard to race or color. — (1) It shall be the public policy of the State that all cemetery companies or other legal entities conducting or maintaining public or private cemeteries shall sell to all applicants and bury all deceased human beings on equal terms without regard to race or color. Anything contrary hereto is void and of no legal effect. Bylaws, rules and regulations, contracts, deeds, etc., may permit designation of parts of cemeteries or burial grounds for the specific use of persons whose religious code required isolation. Any program offering free burial rights to veterans or any other person or group of persons shall not be conditioned by any requirement to purchase additional burial rights or merchandise.

(2)        Any cemetery company or other legal entity violating the provisions of this section shall be guilty of a misdemeanor, punishable as provided in G.S. 14-3, and each violation of this section shall constitute a separate offense."

Sec. 2.  It is declared to be the legislative intent that, if any section, subsection, sentence, clause, or provision of this act is held invalid, the remainder of this act shall not be affected.

Sec. 3.  All laws and clauses of laws in conflict with this act are hereby repealed.

Sec. 4.  This act shall become effective September 1, 1975.

In the General Assembly read three times and ratified, this the 24th day of June, 1975.