There is a newer version of the Texas Statutes
2005 Texas Finance Code CHAPTER 154. PREPAID FUNERAL SERVICES
FINANCE CODE CHAPTER 154. PREPAID FUNERAL SERVICES SUBCHAPTER A. GENERAL PROVISIONS § 154.001. PURPOSE. The purposes of this chapter are to: (1) limit the manner in which a person may accept funds in prepayment of funeral services to be performed in the future; (2) provide a regulatory framework to give the public an opportunity to arrange and pay for funerals in advance of need; and (3) provide all safeguards to protect the prepaid funds and to assure that the funds will be available to pay for prearranged funeral services. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.002. DEFINITIONS. In this chapter: (1) "Commission" means the Finance Commission of Texas. (2) "Commissioner" means the banking commissioner of Texas. (3) "Department" means the Texas Department of Banking. (4) "Earnings" means the amount in an account in excess of the amount paid by the purchaser of a prepaid funeral benefits contract that is deposited in the account as provided by Section 154.253, including accrued interest, accrued income, and enhanced or increased value. (5) "Financial institution" has the meaning assigned by Section 201.101. (6) "Funeral provider" means the funeral home designated in a prepaid funeral benefits contract that has agreed to provide the specified prepaid funeral benefits. (7) "Insurance policy" means a life insurance policy or annuity contract. (8) "Person" means an individual, firm, partnership, corporation, or association. (9) "Prepaid funeral benefits" means prearranged or prepaid funeral or cemetery services or funeral merchandise, including an alternative container, casket, or outer burial container. The term does not include a grave, marker, monument, tombstone, crypt, niche, plot, or lawn crypt unless it is sold in contemplation of trade for a funeral service or funeral merchandise to which this chapter applies. (10) "Seller" means a person selling, accepting money or premiums for, or soliciting contracts for prepaid funeral benefits or contracts or insurance policies to fund prepaid funeral benefits in this state. (11) "Crypt," "grave," "lawn crypt," "niche," and "plot" have the meanings assigned by Section 711.001, Health and Safety Code. (12) "Funeral merchandise" or "merchandise" means goods sold or offered for sale on a preneed basis directly to the public for use in connection with funeral services. (13) "Funeral service" or "service" means a service sold or offered for sale on a preneed basis that may be used to: (A) care for and prepare a deceased human body for burial, cremation, or other final disposition; and (B) arrange, supervise, or conduct a funeral ceremony or the final disposition of a deceased human body. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 62, § 7.40(a), eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 344, § 2.023, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 867, § 72, eff. Sept. 1, 2001. § 154.003. EFFECT ON INSURANCE LAWS. Except as provided by Section 154.004, this chapter does not affect the Insurance Code. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.004. GROUP INSURANCE CONTRACTS. (a) A life insurance company authorized to engage in the business of life insurance in this state may issue a group contract of decreasing term life insurance to persons who purchase prepaid funeral benefits from the same seller. The amount of life insurance for a purchaser must at all times approximate the future unpaid balance of the purchaser's contract for prepaid funeral benefits. (b) A seller has an insurable interest in the life of the purchaser of a prepaid funeral benefits contract to the extent of any unpaid balance of the contract. The proceeds of a life insurance policy received by the seller on the life of the purchaser shall be applied to the unpaid balance. (c) This section does not affect the funding of prepaid funeral benefits by other insurance contracts as provided by Subchapter E. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT § 154.051. ADMINISTRATION OF CHAPTER; FEES. (a) The department shall administer this chapter. (b) The commission may adopt reasonable rules concerning: (1) fees to defray the cost of administering this chapter; (2) the keeping and inspection of records relating to the sale of prepaid funeral benefits; (3) the filing of contracts and reports; (4) changes in the management or control of an organization; and (5) any other matter relating to the enforcement and administration of this chapter. (c) The department may not maintain unnecessary fund balances. Fee amounts must be set in accordance with this requirement. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 73, eff. Sept. 1, 2001. § 154.052. ANNUAL REPORT. (a) The department may require a permit holder to submit an annual report in the form required by the department. (b) The department shall require a seller that discontinues the sale of prepaid funeral benefits but has outstanding contracts to submit an annual report until the contracts are fully discharged. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.053. RECORDS; EXAMINATION. (a) A seller that has outstanding contracts for prepaid funeral benefits shall maintain in this state any record required by the department to determine whether the seller is complying with this chapter. The record is subject to annual examination by the department or its agent and to additional examinations the department considers necessary. (b) The department may examine or audit a record relating to prepaid funeral benefits at any place and in any manner the department considers necessary to protect the interests of the purchasers or beneficiaries. (c) As part of the examination, the department shall be given access to records relating to prepaid funeral benefits of each entity holding a deposit or premium for an annuity contract or a policy of insurance under the account and to any other record necessary to protect the interests of the beneficiaries. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.054. EXAMINATION FEE. (a) For each examination conducted under Section 154.053, the commissioner or the commissioner's agent shall impose on the seller a fee in an amount set by the commission under Section 154.051 and based on the seller's total outstanding contracts. (b) The amount of the fee must be sufficient to cover: (1) the cost of the examination, including: (A) salary and travel expenses for department employees, including travel to and from the place where the records are kept; and (B) any other expense necessarily incurred in conducting the examination; (2) the equitable or proportionate cost of maintaining and operating the department; and (3) the cost of enforcing this chapter. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 74, eff. Sept. 1, 2001. § 154.055. DISCLOSURE OF CERTAIN INFORMATION; CONFIDENTIALITY. (a) Information relating to the financial condition of a seller obtained by the department directly or indirectly, through examination or otherwise, other than published statements, is confidential. (b) The files and records of the department relating to the financial condition of a seller are confidential. (c) The commissioner may disclose the information described by Subsection (a) or (b) to an agency, department, or instrumentality of this or another state or the United States if the commissioner considers disclosure to be in the best interest of the public and necessary or proper to enforce the laws of this or another state or the United States. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.056. PAYMENT OF RESTITUTION MONEY. The department shall pay money received under a restitution order to the injured party as ordered. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.SUBCHAPTER C. PERMITS § 154.101. PERMIT REQUIREMENT. A person must hold a permit issued under this subchapter to: (1) sell prepaid funeral benefits, or accept money for prepaid funeral benefits, in this state under any contract; or (2) solicit an individual's designation of prepaid funeral benefits to be provided out of a fund, investment, security, or contract, including a contract or policy of insurance authorized, and sold under a license issued, by the Texas Department of Insurance, to be created or purchased by that individual at the suggestion or solicitation of the seller. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.102. PERMIT APPLICATION; FEE. To obtain a permit to sell or continue to sell prepaid funeral benefits, a person must: (1) file an application for a permit with the department on a form prescribed by the department; (2) pay a filing fee in an amount set by the commission under Section 154.051; and (3) if applicable, pay extraordinary expenses required for out-of-state investigation of the person. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 75, eff. Sept. 1, 2001. § 154.103. ISSUANCE OF PERMIT. (a) The commissioner may investigate an applicant before issuing an initial permit. (b) The commissioner shall approve the application and issue a permit to the applicant if the commissioner finds that the business ability, experience, character, financial condition, and general fitness of the applicant warrant the public's confidence. The commissioner shall notify the applicant if the commissioner finds otherwise. (c) The applicant on request is entitled to a hearing on the denial of the application, to be held not later than the 60th day after the date of the request. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.104. TERM OF PERMIT. (a) A permit is issued for a one-year term. (b) The commission by rule may adopt a system under which permits expire on various dates during the year. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 76, eff. Sept. 1, 2001. § 154.105. PROHIBITION ON TRANSFER OF PERMIT. A permit is not transferable. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.106. TRANSFER OF BUSINESS OWNERSHIP. (a) A permit holder shall notify by registered mail the department and the depository of the money held under Subchapter F of a transfer in the ownership of the permit holder's business not later than the seventh day after the date the transfer is completed. (b) If the transfer is to a person who is not a permit holder, the person shall file an application for a permit with the department in accordance with this subchapter not later than the 30th day after the date the transfer is completed. (c) The commissioner shall follow the procedures under Sections 154.109-154.111 and Subchapter I for denying the permit application and for seizing the money or records if the person to whom the business is transferred: (1) does not file the application within the period prescribed by Subsection (b); or (2) does not meet the requirements for issuance of a permit under this subchapter. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.107. REQUIRED RENEWAL FOR CERTAIN SELLERS. A seller that discontinues the sale of prepaid funeral benefits but has outstanding contracts shall renew the seller's permit until the contracts are fully discharged. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.108. RENEWAL FEE. The commission shall set the renewal fee under Section 154.051. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 77, eff. Sept. 1, 2001. § 154.109. GROUNDS FOR CANCELLATION OR SUSPENSION OF OR REFUSAL TO RENEW PERMIT. (a) The commissioner by order may cancel or suspend a permit if the commissioner finds, by examination or other credible evidence, that the permit holder: (1) violated this chapter or another law of this state relating to the sale of prepaid funeral benefits, including a final order of the commissioner or rule of the commission; (2) misrepresented or concealed a material fact in the permit application; or (3) obtained, or attempted to obtain, the permit by misrepresentation, concealment, or fraud. (b) The commissioner by order may refuse to renew a permit if the commissioner finds, by examination or other credible evidence, that the permit holder: (1) committed one or more of the acts described by Subsection (a); and (2) did not correct the violation before the 31st day after the date of written notice from the commissioner. (c) The commissioner may cancel the permit of a seller that fails to provide to the department evidence of payment of insurance premiums required by the department under Section 154.203 after the department by written notice requests the evidence. (d) The commissioner may place on probation a permit holder whose permit is suspended. If a permit suspension is probated, the commissioner may require the permit holder: (1) to report regularly to the department on matters that are the basis of the probation; or (2) to limit its activities as prescribed by the commissioner. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 78, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 699, § 5, eff. Sept. 1, 2001. § 154.110. ORDER TO CANCEL, SUSPEND, OR REFUSE TO RENEW PERMIT. (a) An order issued under Section 154.109 must state: (1) with reasonable certainty the grounds for the order; and (2) the effective date, which may not be before the 16th day after the date the order is mailed. (b) The order shall be served on the person named in the order by certified mail, return receipt requested, to the last known address of the person. (c) The order takes effect as proposed unless the person named in the order requests a hearing not later than the 15th day after the date the order is mailed. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.111. SUCCESSOR PERMIT HOLDER. (a) The commission shall adopt rules governing the selection of a successor permit holder. (b) A successor permit holder to whom the commissioner transfers a contract under Section 154.413 shall perform the contract and is entitled to retain the money that would have been due the person whose permit was canceled, including any money seized by the commissioner. (c) Any premium received through the selection process that exceeds the claims against the prior permit holder shall be deposited in the fund maintained under Section 154.351. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 79, eff. Sept. 1, 2001.SUBCHAPTER D. GENERAL PROVISIONS FOR SALES CONTRACTS § 154.151. FORM OF CONTRACT. (a) The department must approve a sales contract form for prepaid funeral benefits before the form is used. (b) A sales contract for prepaid funeral benefits must: (1) be in writing; (2) state the name of the funeral provider or other person primarily responsible for providing the prepaid funeral benefits specified in the contract; and (3) state the details of the prepaid funeral benefits to be provided, including a description and specifications of the material used in the caskets or grave vaults to be furnished. (c) A funeral provider designated in the contract to provide prepaid funeral benefits that are not sold by the funeral provider must: (1) be a party to the contract; and (2) agree in the contract to provide those benefits. (d) A sales contract for prepaid funeral benefits, whether in English or Spanish, must be written in plain language designed to be easily understood by the average consumer. The contract must be printed in an easily readable font and type size. The department shall provide model contracts complying with this subsection and shall enforce this subsection. (e) The Finance Commission of Texas by rule shall establish a standard disclosure that must be included in each contract to inform purchasers of the goods and services that will be provided or excluded under the contract and the circumstances under which the contract may be modified after death of the beneficiary. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 699, § 6, eff. Sept. 1, 2001. § 154.152. REPRESENTATIONS REGARDING APPROVAL OF PERMIT HOLDER. A permit holder may represent that the department has approved or otherwise chosen a prepaid funeral vendor only with the following language: "The Texas Banking Department regulates the sale of prearranged funeral contracts" and "The form of this contract has been approved by the Department." Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.153. ALLOCATION OF SALES PRICE. A seller may not increase the sales price of an item not covered by this chapter to allocate a lesser sales price to an item covered by this chapter. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.154. AGREEMENT TO PAY FINANCE CHARGE. A purchaser of a prepaid funeral benefits contract may agree in writing to pay the seller a finance charge in accordance with Chapter 345 on an amount due the seller on the contract. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.155. CANCELLATION OF CONTRACT. (a) A purchaser of a prepaid funeral benefits contract may cancel the contract before maturity by giving written notice of cancellation to the seller on forms prescribed by the department. The seller shall maintain copies of the cancellation forms for examination by the department. (b) Not later than the 30th day after the date of the cancellation notice, the seller shall withdraw and pay to the purchaser money in the depository being held for the purchaser's use and benefit. (c) The purchaser or seller may not make a partial cancellation or withdrawal. (d) The purchaser is entitled to receive the actual amount paid by the purchaser and half of all earnings attributable to that money, less the amount permitted to be retained as provided by Section 154.252, except as provided by Subsection (e) and by Sections 154.205 and 154.254. (e) A purchaser who cancels a contract on the solicitation of the seller is entitled to withdraw all money paid to the seller and all earnings attributable to that money. If the money is used to purchase a new prepaid funeral benefits contract under a solicitation by the seller, the new contract must protect the purchaser to an extent equal to or greater than that provided by the original contract, as determined by the department. Under the new contract, the cost to the purchaser of the same or substantially the same services or merchandise may not be greater than that provided by the canceled contract. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 699, § 7, eff. Sept. 1, 2001. § 154.1551. MODIFICATION AT TIME OF FUNERAL. (a) The funeral merchandise and services to be provided by the seller under a fully paid prepaid funeral benefits contract may be modified after the death of the beneficiary if the modification complies with Subsection (b) or is otherwise agreed to in a writing signed by the seller and the person charged with the disposition of the beneficiary's remains by Section 711.002(a), Health and Safety Code, except that: (1) if the purchaser of the contract is also the beneficiary: (A) the contracted funeral merchandise and services may not be modified if the contract contains a clause that prohibits modification; and (B) a modification may not change the type of disposition specified by the purchaser in the contract, whether by burial, cremation, or another alternative by which the purchaser's remains attain their final resting place, as provided by Section 711.002(g), Health and Safety Code; and (2) the value attributed to any contracted funeral merchandise or service that is surrendered or exchanged in a modification must be computed on a comparable time-price basis with the price charged for substituted funeral merchandise or service provided as part of the modification. (b) The person charged with the disposition of the beneficiary's remains by Section 711.002(a), Health and Safety Code, may make reasonable modifications to the funeral merchandise and services provided under a prepaid funeral contract at the time the funeral is performed, not to exceed 10 percent of the original purchase price of the contract. This subsection does not require the seller to: (1) refund a portion of the funds attributable to the contract if the seller grants credit for surrender or exchange as provided by Subsection (a)(2); (2) provide substituted or additional funeral merchandise or services in excess of credits granted under Subsection (a)(2) unless the seller receives additional compensation at current prices; or (3) apply a portion of the funds attributable to the contract or credits granted under Subsection (a)(2) to another contract or funeral. (c) The person charged with the disposition of the beneficiary's remains by Section 711.002(a), Health and Safety Code, may not modify a prepaid funeral benefits contract that has not been fully paid at the time of death of the beneficiary except as agreed to in a writing signed by the seller and the person. Added by Acts 2001, 77th Leg., ch. 699, § 8, eff. Sept. 1, 2001. § 154.156. WAIVER OF RIGHT OF CANCELLATION. (a) The purchaser of a prepaid funeral benefits contract may irrevocably waive the purchaser's right to cancel the contract under Section 154.155. The waiver must be in a separate writing signed by the purchaser and the seller not earlier than the 15th day after the date of the purchase of the contract. The form of the waiver must comply with the requirements for the form of a sales contract under Section 154.151. (b) A waiver made under this section does not affect: (1) a right the purchaser has under the contract to change the beneficiary of the contract; (2) the purchaser's right to cancel the contract under Section 154.413; (3) an abandonment of the money paid by the purchaser under the contract as provided by Subchapter G; or (4) a modification to the contract as provided by Section 154.1551. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 699, § 9, eff. Sept. 1, 2001. § 154.157. PERFORMANCE OF CONTRACT. Delivery of funeral merchandise before death is not performance, in whole or in part, of a prepaid funeral benefits contract entered into after July 15, 1963. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.158. ENFORCEMENT OF CONTRACT. A seller that violates Section 154.101 may not enforce a prepaid funeral benefits contract, but the purchaser or an heir or legal representative of the purchaser is entitled to recover: (1) the amount paid to the seller under the contract; and (2) the amount paid to a fund or for an investment, security, or contract, including a contract or policy of insurance authorized by the Texas Department of Insurance. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.159. ADMINISTRATION OF MONEY RECEIVED. Money received for prepaid funeral benefits shall be administered as prescribed by Section 154.155 and Subchapters E and F, as applicable. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.160. AGENT; DEPOSIT OF MONEY. (a) A seller shall designate one or more agents by name or title. (b) The seller shall notify the department of: (1) the designation not later than the 10th day after the date the seller becomes subject to this chapter; and (2) any change in the designation within the 10-day period preceding the date of the change. (c) An agent designated under this section is: (1) considered a fiduciary for purposes of Section 32.45, Penal Code; and (2) responsible for the deposit of money collected under prepaid funeral benefits contracts. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.SUBCHAPTER E. INSURANCE-FUNDED PREPAID FUNERAL BENEFITS § 154.201. REQUIREMENTS FOR SOLICITATION OF BENEFITS. A seller may not solicit an individual's designation of prepaid funeral benefits to be paid from a fund, investment, security, or contract, including an insurance policy, to be created or purchased by or for that individual at the suggestion or solicitation of the seller: (1) unless the fund is created by an insurance policy approved by the Texas Department of Insurance and issued by an insurance company licensed by the Texas Department of Insurance; (2) except as provided by Subchapter F for trust-funded prepaid funeral benefits; or (3) unless the fund, investment, security, or contract has been approved by the department as safeguarding the rights and interests of the individual and the individual's heirs and assigns to substantially the same or a greater degree as provided with respect to money regulated by Subchapter F. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.202. EXECUTION OF CONTRACT IN CONJUNCTION WITH APPLICATION FOR POLICY. An insurance-funded prepaid funeral benefits contract must be executed in conjunction with the application for the issuance of the insurance policy. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.203. PAYMENT OF PREMIUMS. (a) A seller shall remit to the insurance company the premiums collected for an insurance policy that funds prepaid funeral benefits not later than the 30th day after the date of collection. (b) The department may require evidence of payment of premiums on an insurance policy used to create a fund to guarantee prepaid funeral benefits. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.204. CONVERSION FROM TRUST-FUNDED PREPAID FUNERAL BENEFITS. (a) The department must approve a conversion from trust-funded prepaid funeral benefits to insurance-funded prepaid funeral benefits as safeguarding the rights and interests of the individual who purchases the prepaid funeral benefits contract. (b) Each contract holder shall be notified in writing of: (1) the terms of the proposed conversion; and (2) the holder's right to decline the conversion. (c) An application for approval of a conversion from trust-funded prepaid funeral benefits to insurance-funded prepaid funeral benefits must be: (1) filed with the department on forms prescribed by the department; and (2) accompanied by a conversion application fee set by the department under Section 154.051. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.205. AMOUNT PAYABLE ON CANCELLATION OF CONTRACT. A purchaser of an insurance-funded prepaid funeral benefits contract who cancels the contract during the first year of the contract when payments required under the contract are current is entitled to receive the cash surrender value of the policy. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.206. ASSIGNMENT OF RIGHT TO BENEFITS. The purchaser of an insurance-funded prepaid funeral benefits contract may irrevocably assign the purchaser's ownership of and rights to benefits under the insurance policy to the seller, the funeral provider, the trustee, or other person. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.207. WITHDRAWAL OF BENEFITS PAYABLE UNDER POLICY. (a) The seller or funeral provider may withdraw the benefits payable under an insurance policy funding prepaid funeral benefits after: (1) the beneficiary named in the contract dies; (2) the funeral service is completed; and (3) the insurance company is presented with: (A) appropriate affidavits by an officer or designated agent of the seller on forms prescribed by the department; and (B) a certified copy of the death certificate. (b) The seller shall maintain copies of the affidavits and death certificate for examination by the department. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.SUBCHAPTER F. TRUST-FUNDED PREPAID FUNERAL BENEFITS § 154.251. APPLICABILITY. (a) This subchapter applies only to money paid or collected on a trust-funded prepaid funeral benefits contract entered into after July 15, 1963. (b) Money paid or collected on a prepaid funeral benefits contract entered into before July 15, 1963, shall be handled in accordance with the law in effect on the date the contract was entered into. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.252. RETENTION OF MONEY FOR EXPENSES. The seller of a trust-funded prepaid funeral benefits contract may retain for the seller's use and benefit an amount not to exceed one-half of all money collected or paid until the seller has received an amount equal to 10 percent of the total amount the purchaser agreed to pay under the contract. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 699, § 10, eff. Sept. 1, 2001. § 154.253. DEPOSIT OF MONEY PAID OR COLLECTED. (a) Not later than the 30th day after the date of collection, the money, other than money retained as provided by Section 154.252, shall be deposited: (1) in a financial institution that has its main office or a branch in this state in an interest-bearing account insured by the federal government; or (2) in trust with a financial institution that has its main office or a branch located in this state and is authorized to act as a fiduciary in this state, to be invested by the financial institution as trustee in accordance with this subchapter. (b) An account described by Subsection (a), including a trust account, shall be carried in the name of the funeral provider or other entity to whom the purchaser makes payment. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 344, § 2.024, eff. Sept. 1, 1999. § 154.254. AMOUNT PAYABLE ON CANCELLATION OF CONTRACT. A purchaser of a trust-funded prepaid funeral benefits contract who cancels the contract during the first year of the contract when payments required under the contract are current is entitled to receive, regardless of the amount held in trust, the greater of: (1) 90 percent of the actual amount paid by the purchaser; or (2) the amount deposited in trust with respect to the purchaser's contract. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.255. STANDARD OF DUTY OF DEPOSITORY. A depository shall be held to the standard of duty of a fiduciary in holding, investing, or disbursing the money. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.256. STANDARD OF CARE OF TRUSTEE. A trustee, in administering assets held in a prepaid funeral benefits trust, shall exercise the judgment and care under the circumstances that a person of ordinary prudence, discretion, and intelligence exercises in the management of the person's own affairs, not in regard to speculation but in regard to the permanent disposition of the person's money, considering: (1) the probable income from and probable increase in value of the person's capital; (2) the safety of the person's capital; and (3) the investment of all the assets of the trust the trustee has the power to administer rather than the prudence of a single investment of the trust. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.257. INVESTMENT PLAN. (a) A permit holder or trustee, if the permit holder deposits the money with a financial institution as trustee, shall: (1) adopt a written investment plan consistent with this section and Sections 154.256 and 154.258 that specifies the quality, maturity, and diversification of investments; (2) at least annually, review the adequacy and implementation of the investment plan; (3) maintain investment records covering each transaction; and (4) maintain the investment plan in the principal offices of the permit holder and trustee. (b) The permit holder shall provide the investment plan to the department with the filing of the permit holder's annual report. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 344, § 2.025, eff. Sept. 1, 1999. § 154.258. PERMITTED INVESTMENTS. (a) Money in a prepaid funeral benefits trust may be invested only in: (1) demand deposits, savings accounts, certificates of deposit, or other accounts issued by 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, and rules adopted under that section; (2) bonds, evidences of indebtedness, or obligations of the United States or an instrumentality of the United States; (3) bonds, evidences of indebtedness, or obligations the principal and interest of which are guaranteed by the full faith and credit of the United States; (4) bonds of a state or local government that are exempt from federal income taxation and that are rated: (A) "Aa" or better by Moody's bond rating service; or (B) "AA" or better by Standard and Poor's bond rating service; (5) bonds, evidences of indebtedness, or obligations of corporations organized under state or federal law and that are rated: (A) "A" or better by Moody's bond rating service; or (B) "A" or better by Standard and Poor's bond rating service; (6) notes, evidences of indebtedness, or participation in notes or evidences of indebtedness, secured by a first lien on real property located in the United States, if the amount of each obligation does not exceed 90 percent of the value of the real property securing that obligation; (7) common stock of a corporation that is organized under state or federal law and: (A) has a net worth of at least $1 million; or (B) will have a net worth of at least $1 million after completion of a securities offering to which the trust is subscribing; (8) preferred stock of a corporation organized under state or federal law and that is rated: (A) "Baa" or better by Moody's bond rating service; or (B) "BBB" or better by Standard and Poor's bond rating service; (9) investments not covered by this subsection, including real property, oil and gas interests, and limited partnerships; (10) mutual funds, collective investment funds, or similar participative investment funds, the assets of which are invested only in investments that are permitted under this section and that, if aggregated with other investments, meet the percentage limitations specified by this section; and (11) other investments the department approves in writing. (b) Not more than 70 percent of the money related to a single permit holder may be invested in investments described by Subsection (a)(5), (6), (7), or (8). (c) Not more than 10 percent of the money related to a single permit holder may be invested in investments described by Subsection (a)(9). (d) Not more than 20 percent of the money related to a single permit holder may be invested in a single issue of an investment, except insured deposits and government securities. (e) The commissioner may waive a limitation provided by Subsection (b), (c), or (d), on written request of a permit holder, if the commissioner concludes that the waiver does not threaten an unreasonable risk of loss to the prepaid funeral benefits trust funds. The commissioner by order shall approve or disapprove the request not later than the 60th day after the date the commissioner receives the request. If the commissioner does not disapprove the request before the expiration of that period, the request is approved. If the permit holder does not request a hearing before the 11th day after the date of an order of disapproval, the order takes effect on that 11th day. If a hearing is timely requested, the hearing shall be conducted as a contested case under Chapter 2001, Government Code. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 62, § 7.41(a), eff. Sept. 1, 1999; Acts 1999, 76th Leg., ch. 344, § 2.026, eff. Sept. 1, 1999; Acts 2001, 77th Leg., ch. 1420, § 6.028, eff. Sept. 1, 2001. § 154.259. DISPOSAL OF NONCONFORMING INVESTMENTS. Before September 1, 1996, a permit holder or trustee shall dispose of any investment made before September 1, 1993, that does not comply with Sections 154.256-154.258 with respect to the type of investment or the percentage of trust money that may be invested in certain types of investments, except that the commissioner may grant a permit holder or trustee an extension of one year or longer to dispose of a nonconforming investment if, in the commissioner's opinion: (1) the permit holder or trustee has made a good faith effort to dispose of the nonconforming investment; or (2) the disposal of the nonconforming investment would be materially detrimental to the best interests of the purchasers of prepaid funeral benefits contracts. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.260. USE OF MONEY TO PURCHASE, LEASE, OR INVEST IN ASSET OWNED BY SELLER OR FUNERAL PROVIDER. (a) The depository of money under Section 154.253 must obtain the commissioner's prior written approval to use that money to purchase, lease, or invest in an asset owned by the seller or funeral provider or an affiliate of the seller or funeral provider. (b) The commissioner by order may disapprove a transaction described by Subsection (a) on the ground that it would materially adversely affect the interests of the purchasers of prepaid funeral benefits contracts. (c) The commissioner shall enter an order approving or disapproving the transaction not later than the 30th day after the date the commissioner receives written notification by the permit holder. The transaction is considered approved if the commissioner does not act within that period. (d) The order takes effect as proposed unless the permit holder requests a hearing not later than the 10th day after the date of the order. (e) In this section, "affiliate" means a person or entity directly or indirectly controlling, controlled by, or under common control with a permit holder or funeral provider. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.261. WITHDRAWAL OF EARNINGS TO PAY CERTAIN EXPENSES. (a) The seller of a trust-funded prepaid funeral benefits contract may withdraw money from earnings on an account described by Section 154.253 to pay: (1) reasonable and necessary trustee's fees or depository fees; (2) the examination fee for one examination by the department each calendar year; or (3) the expense of preparation of financial statements required by the department, including those financial statements required by the department instead of an examination. (b) With the department's prior approval, the seller may withdraw money from earnings on an account to pay: (1) any tax incurred because of the existence of the account; or (2) an assessment under Subchapter H. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.262. WITHDRAWAL OF MONEY ON DEATH OF BENEFICIARY. (a) The seller of a trust-funded prepaid funeral benefits contract may withdraw an amount equal to the original contract amount paid by the purchaser and the earnings attributable to the contract, less the amount retained under Section 154.252, after: (1) the beneficiary named in the contract dies; (2) the funeral service is completed; and (3) the depository is presented with: (A) appropriate affidavits by an officer or agent of the seller on forms prescribed by the department; and (B) a certified copy of the death certificate. (b) The seller shall maintain copies of the affidavits and death certificate for examination by the department. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.263. WITHDRAWAL OF EARNINGS ATTRIBUTABLE TO CONTRACT. On the maturity date of a trust-funded prepaid funeral benefits contract as provided by Section 154.262 and after the funeral provider has performed its obligations under the contract, or at the time of cancellation of the contract as provided by Section 154.155 or 154.254, the seller may withdraw from an account described by Section 154.253: (1) the proportionate part of the earnings that the amount deposited under the contract bears to the total amount deposited from all unmatured contracts, less the amount of excess earnings that was withdrawn in accordance with prior law; or (2) if the commissioner has determined that the records of the permit holder are adequate to allow this method to be exercised accurately, an amount equal to the actual earnings on individual matured contracts, less any properly allocated expenses permitted by this subchapter and less the amount of excess earnings that was withdrawn in accordance with prior law. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.264. ACCOUNTING RECORDS. A seller shall maintain accounting records showing the amount deposited or invested under this subchapter with respect to each contract. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.SUBCHAPTER G. ABANDONED CONTRACTS § 154.301. PRESUMPTION OF ABANDONMENT. (a) Money paid by a purchaser of a prepaid funeral benefits contract is personal property subject to presumption of abandonment and delivery to the comptroller under Title 6, Property Code. This subchapter controls in case of conflict with that title. (b) Money paid by a purchaser of a prepaid funeral benefits contract and held in the name of the seller at a depository under Subchapter F is presumed abandoned if: (1) the amount due the seller from the purchaser under the contract has been collected and: (A) the seller has not known the existence and location of the purchaser or the beneficiary of the contract for the three preceding years; (B) according to the knowledge and records of the seller, a claim to the money or contract has not been asserted or an act of ownership of the money or contract has not been exercised during the three preceding years; (C) at least 60 years have elapsed since the date the purchaser executed the contract; and (D) at least 90 years have elapsed since the date of birth of the beneficiary of the contract; or (2) the amount due the seller from the purchaser under the contract has not been paid and during the three preceding years: (A) the purchaser has not made a payment to the seller under the contract; (B) the seller has not known the existence and location of the purchaser or the beneficiary of the contract; and (C) according to the knowledge and records of the seller, a claim to the money or contract has not been asserted and an act of ownership of the money or contract has not been exercised. (c) For purposes of Title 6, Property Code, the seller of the contract for which money is presumed abandoned under Subsection (b) is the holder of the money, and the purchaser or the beneficiary of the contract is the owner of the money. (d) The presumption of abandonment provided by Subsection (b) does not apply to: (1) money retained by the seller to cover selling expenses, service costs, and general overhead, as provided by Section 154.252; and (2) earnings attributable to money paid by the purchaser under the contract. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.302. NOTICE OF ABANDONED MONEY. On June 30 of each year, a seller that holds money presumed abandoned under Section 154.301(b) shall furnish the commissioner with an acknowledged written notice of the abandoned money not later than the following October 1. The notice must include: (1) the name and address, if known, of each person who appears to be the purchaser or the beneficiary of the contract; (2) the identification number, if any, of the contract; (3) the total amount paid on the contract; (4) the amount paid on the contract and held at the depository; (5) the earnings of the contract; and (6) a statement by the seller recognizing the seller's obligation and intent to deliver the abandoned money to the comptroller in accordance with this subchapter. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.303. AUTHORIZATION TO WITHDRAW MONEY. (a) Not later than the 15th day after the date the notice required by Section 154.302 is received, the commissioner shall give the seller written authorization to: (1) withdraw the money presumed abandoned as specified in the notice; and (2) subject to Subsection (b), withdraw and retain the money specified in the notice that represents the earnings attributable to the abandoned money. (b) The commissioner may refuse to authorize the seller to withdraw the earnings described by Subsection (a)(2) only if: (1) the department has canceled or refused to renew the seller's permit to sell prepaid funeral benefits; (2) the seller is the subject of a pending proceeding to cancel the seller's permit to sell prepaid funeral benefits; or (3) the department has: (A) determined from an examination of the seller's records that the seller has made withdrawals from accounts maintained by the seller that were not authorized under this chapter; and (B) previously given written notice to the seller of that determination. (c) Not later than the 15th day after the date the notice under Section 154.302 is received, the commissioner shall give written notice to the seller stating the reason the commissioner will not authorize the seller to withdraw the earnings described by Subsection (a)(2). (d) A seller that did not receive the commissioner's authorization to withdraw earnings because of Subsection (b)(2) is entitled to withdraw and retain the earnings if the department or a court subsequently determines that the seller's permit should not be canceled. (e) A seller that did not receive the commissioner's authorization to withdraw earnings because of Subsection (b)(3) is entitled to withdraw and retain the earnings on redepositing in the accounts the amount of the unauthorized withdrawals. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.304. DELIVERY TO COMPTROLLER OF ABANDONED MONEY AND REPORT. Not later than the first November 1 after the date the commissioner receives the notice required by Section 154.302, the seller shall deliver to the comptroller: (1) the abandoned money; and (2) the report required to be filed under Chapter 74, Property Code. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.305. DISCHARGE OF CONTRACTUAL OBLIGATIONS; INDEMNITY OF SELLER. (a) The delivery of abandoned money and reporting to the comptroller under Section 154.304: (1) relieves the seller of the obligations and liabilities under the prepaid funeral benefits contract; (2) cancels the prepaid funeral benefits contract; and (3) discharges the obligations and liabilities of and claims against the seller and funeral provider. (b) A seller that delivers money to the comptroller under Section 154.304 shall be indemnified under Section 74.304, Property Code, for any claim that may be made with respect to the property. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.306. LIABILITY AND OBLIGATIONS OF COMPTROLLER. (a) The comptroller is liable to the purchaser or beneficiary of a prepaid funeral benefits contract presumed abandoned under this subchapter only to the extent of money that is attributable to the contract and delivered to the comptroller. (b) The comptroller is not obligated to perform the seller's duties under an abandoned prepaid funeral benefits contract. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.307. RECOURSE OF PURCHASER OR BENEFICIARY. A purchaser's or beneficiary's sole recourse after a seller has delivered abandoned money and reported to the comptroller under Section 154.304 is to file a claim with the comptroller as provided by Chapter 74, Property Code. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.SUBCHAPTER H. GUARANTY FUND § 154.351. MAINTENANCE OF GUARANTY FUND. The commission by rule shall establish and the department shall maintain a fund to guarantee performance by sellers of prepaid funeral benefits contracts of their obligations to the purchasers under the provisions of this chapter governing prepaid funeral trusts. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 80, eff. Sept. 1, 2001. § 154.352. ASSESSMENT ON SALES CONTRACTS. (a) The department shall assess and collect from a seller not more than $1 for each unmatured prepaid funeral benefits contract sold during each calendar year and shall deposit the assessments in the fund. (b) The department shall stop assessing the amounts required by Subsection (a) when the amount in the fund first reaches $1 million. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.353. DEPOSIT OF FUND. (a) The fund may be deposited with: (1) the comptroller; (2) a federally insured financial institution that has its main office or a branch in this state; or (3) in trust with a financial institution that has its main office or a branch in this state and is authorized to act as a fiduciary in this state. (b) If the fund is deposited with the comptroller, the comptroller shall manage the fund as trustee of money outside the state treasury. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 1999, 76th Leg., ch. 344, § 2.027, eff. Sept. 1, 1999. § 154.354. USE OF FUND EARNINGS. The department may use the earnings from the fund to operate and maintain the fund. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.355. ADVISORY COUNCIL. (a) An advisory council composed of the following individuals shall supervise the operation and maintenance of the fund: (1) the commissioner or the commissioner's representative; (2) the attorney general or the attorney general's representative; (3) one representative of the funeral industry appointed by the Finance Commission of Texas; and (4) one consumer representative appointed by the Finance Commission of Texas. (b) The funeral industry and consumer representatives serve two-year terms and may not serve more than two terms. (c) The commissioner shall cast the deciding vote if there is a tie vote by members of the advisory council. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.356. ASSESSMENT ON OUTSTANDING CONTRACTS TO PAY CLAIMS. (a) To pay a claim against the fund when the balance of the fund is insufficient to pay that claim, the advisory council may assess each person that holds a permit under this chapter based on the permit holder's proportionate share of the purchasers' deposits on all outstanding prepaid funeral benefits contracts. (b) The assessments shall be deposited in the fund and administered by the department and the advisory council in accordance with commission rules. (c) An assessment made under this section is in addition to any assessment required by Section 154.352. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 81, eff. Sept. 1, 2001. § 154.357. CLAIM AGAINST SELLER OR DEPOSITORY. The department may assert a claim against a seller or depository that commits a violation of this chapter that could result in a claim against the fund. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.SUBCHAPTER I. CRIMINAL PENALTIES AND CIVIL REMEDIES § 154.401. CRIMINAL PENALTY FOR CERTAIN VIOLATIONS OF CHAPTER. (a) Except as provided by Section 154.402, an officer, director, agent, or employee of a seller commits an offense if the person: (1) makes or attempts to make a contract in violation of this chapter; (2) refuses to allow an inspection of the seller's records relating to the sale of prepaid funeral benefits; (3) engages in fraud, deception, misrepresentation, or another dishonest practice in the sale of a contract subject to this chapter; or (4) otherwise violates this chapter. (b) An offense under this section for which a penalty is not expressly provided by this subchapter is punishable by: (1) a fine of not less than $100 or more than $500; (2) confinement in the county jail for a term of not less than one month or more than six months; or (3) both the fine and confinement. (c) Each violation of this chapter is a separate offense and shall be prosecuted individually. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.402. CRIMINAL PENALTY RELATING TO DEPOSIT OR WITHDRAWAL OF MONEY. (a) A person commits an offense if the person: (1) fails to deposit money in compliance with this chapter; or (2) withdraws money in a manner inconsistent with this chapter. (b) An offense under this section is punishable as if it were an offense under Section 32.45, Penal Code. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.403. CRIMINAL PENALTY FOR FAILURE TO FILE REPORT. (a) An officer of a seller commits an offense if the officer fails or refuses to file an annual report required by Section 154.052 before the 31st day after the date the officer is notified by the department of the requirement. (b) An offense under this section is a misdemeanor and is punishable as provided by Section 154.401. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.404. CRIMINAL PENALTY FOR FAILURE TO DELIVER MONEY TO DESIGNATED AGENT. (a) A seller or a person acting on behalf of a seller commits an offense if the seller or person: (1) collects money under a prepaid funeral benefits contract; and (2) fails to deliver the money to a designated agent of the seller before the 31st day after the date it is collected. (b) An offense under this section is punishable as if it were an offense under Section 32.45, Penal Code. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.405. CRIMINAL PENALTY FOR AGENT'S FAILURE TO DEPOSIT CERTAIN MONEY. (a) A designated agent of a seller commits an offense if the agent fails to deposit money collected under a prepaid funeral benefits contract before the 31st day after the date it is received by the agent. (b) It is an exception to the application of this section that the failure to make a deposit is inadvertent and is corrected before the 11th day after the date the seller discovers the failure. (c) An offense under this section is punishable as if it were an offense under Section 32.45, Penal Code. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.406. ADMINISTRATIVE PENALTY. (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 commission and does not correct the violation before the 31st day after the date the person receives written notice of the violation from the 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. (d) The imposition of a penalty under this section is subject to judicial review as a contested case under Chapter 2001, Government Code. (e) The commissioner may collect the penalty in the same manner that a money judgment is enforced in district court. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 699, § 11, eff. Sept. 1, 2001; Acts 2001, 77th Leg., ch. 867, § 82, eff. Sept. 1, 2001; Acts 2003, 78th Leg., ch. 1276, § 8.003, eff. Sept. 1, 2003. § 154.4061. 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 154.406 be imposed on the person committing the violation or that the commissioner cancel or not renew the person's permit under this chapter. (b) For the purposes of this section, violations corrected as provided by Section 154.406 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, § 12, eff. Sept. 1, 2001. § 154.407. INJUNCTIVE RELIEF. The commissioner may sue in a district court in Travis County to enjoin a violation or threatened violation of: (1) this chapter; or (2) a final order of the commissioner or rule of the commission. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 83, eff. Sept. 1, 2001. § 154.408. CEASE AND DESIST ORDER. (a) The commissioner may issue a cease and desist order to a person if the commissioner finds by examination or other credible evidence that the person has violated a law of this state relating to the sale of prepaid funeral benefits, including a violation of this chapter or a final order of the commissioner or rule of the commission. (b) The order must state: (1) with reasonable certainty the grounds for the order; and (2) the effective date, which may not be before the 16th day after the date the order is mailed. (c) The order shall be served on the person named in the order by certified mail, return receipt requested, to the last known address of the person. (d) The order takes effect as proposed unless the person named in the order requests a hearing not later than the 15th day after the date the order is mailed. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. Amended by Acts 2001, 77th Leg., ch. 867, § 84, eff. Sept. 1, 2001. § 154.409. SUIT BY ATTORNEY GENERAL. (a) The department may notify the attorney general of a violation of this chapter. (b) The attorney general shall institute suit in the name of this state against a person who violates this chapter in the county in which the violation occurred. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.410. QUO WARRANTO PROCEEDINGS. (a) The attorney general may institute a quo warranto proceeding in a district court of Travis County to forfeit the charter or the right to do business of a corporation an officer, director, agent, or employee of which refuses or fails to correct a violation of this chapter after the department or attorney general notifies the officer, director, agent, or employee of the violation. (b) Thirty days is considered a sufficient period to correct the violation after notice from the department or attorney general. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.411. RESTITUTION. The commissioner may issue an order to a person requiring restitution if, after notice and opportunity for hearing, the commissioner finds that the person: (1) failed to deposit money in accordance with Subchapter F; or (2) misappropriated, converted, or illegally withheld or failed or refused to pay on demand money entrusted to the person that belongs to the beneficiary under a prepaid funeral benefits contract. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.412. SEIZURE OF PREPAID FUNERAL MONEY AND RECORDS. (a) After the commissioner cancels or fails to renew a permit under Section 154.109(a) or on notice to a person required to obtain a permit under this chapter, the commissioner may issue an order to seize the prepaid funeral money, including earnings, where that money is held and may issue an order to seize the records that relate to the sale of prepaid funeral benefits if the commissioner finds, by examination or other credible evidence, that the person: (1) failed to deposit or remit money in accordance with Subchapter E or F; (2) misappropriated, converted, or illegally withheld or failed or refused to pay on demand money entrusted to the person that belongs to the beneficiary under a prepaid funeral benefits contract; (3) refused to submit to examination by the department; (4) was the subject of an order to cancel, suspend, or refuse to renew a permit; or (5) does not hold a permit or transferred the ownership of its business to another person who does not hold a permit and who: (A) did not apply for a new permit before the 31st day after the date the transfer was completed; or (B) was denied a new permit. (b) An order shall be served on the person named in the order by certified mail, return receipt requested, to the last known address of the person. (c) An order takes effect immediately if the commissioner finds that immediate and irreparable harm is threatened to a beneficiary under a prepaid funeral benefits contract. If such a threat does not exist, the order must state the effective date, which may not be before the 16th day after the date the order is mailed. (d) An order takes effect as proposed unless the person named in the order requests a hearing not later than the 15th day after the date the order is mailed. (e) Premiums received on the disposition of a contract related to the seizure of prepaid funeral money shall be handled as provided by Sections 154.111 and 154.413. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.413. NOTIFICATION OF PURCHASER. Not later than the 30th day after the date prepaid funeral money is seized under Section 154.412, the commissioner may notify each known person who purchased prepaid funeral benefits under a contract from the permit holder whose permit is canceled. The notice must: (1) include an explanation of the procedures under this chapter for canceling the contract and claiming money that may be due the person if the person elects to cancel; (2) inform the person on continuing to make payments under the contract if the person elects to keep the contract in force; and (3) inform the person that if the person elects to keep the contract in force the commissioner will transfer: (A) responsibility to perform the contract to a responsible successor permit holder selected by the commissioner; or (B) the seized money to the fund maintained under Section 154.351,subject to the claims process prescribed by rule under Subchapter H. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997. § 154.414. LIQUIDATION OF BUSINESS AND AFFAIRS OF PERSON FOLLOWING SEIZURE OF MONEY AND RECORDS. After an order issued under Section 154.412(a) becomes final and unappealable, the commissioner may petition the district court in the county in which a person required to hold a permit under this chapter resides to request the issuance of an order to show cause why the business and affairs of that person should not be liquidated and a receiver appointed by the court for that purpose if: (1) the person: (A) failed to deposit money in accordance with Subchapter F; (B) misappropriated, converted, or illegally withheld or failed or refused to pay on demand money entrusted to that person that belongs to the beneficiary under a prepaid funeral benefits contract; or (C) allowed the person's permit to lapse or had the permit revoked under this chapter and did not make adequate provision for the administration of the money deposited with the person for prepaid funeral benefits contracts in accordance with the contract and applicable law, including rules; and (2) the person failed or refused to correct the violation before the 31st day after the date the person received written notice from the commissioner. Acts 1997, 75th Leg., ch. 1008, § 1, eff. Sept. 1, 1997.
Disclaimer: These codes may not be the most recent version. Texas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
