2005 Texas Health & Safety Code CHAPTER 712. PERPETUAL CARE CEMETERIES

HEALTH & SAFETY CODE

CHAPTER 712. PERPETUAL CARE CEMETERIES

SUBCHAPTER A. GENERAL PROVISIONS


	§ 712.001. DEFINITIONS.  (a) The definitions provided by 
Section 711.001 apply to this chapter.
	(b)  In this chapter:                                                          
		(1)  "Banking department" or "department" means the 
Banking Department of Texas.
		(2)  "Commissioner" means the Banking Commissioner of 
Texas.                
		(3)  "Corporation" means a corporation that is 
organized under this chapter, or any corresponding statute in 
effect before September 1, 1993, to operate one or more perpetual 
care cemeteries in this state.
		(4)  "Fund" means a perpetual care trust fund 
established by one or more corporations under this chapter or any 
corresponding statute in effect before September 1, 1993.
		(4-a)  "Preconstruction trust" means a trust 
established by a corporation under this chapter for the purpose of 
administering proceeds from sales of undeveloped mausoleum spaces.
		(4-b)  "Preconstruction trustee" means the trustee of a 
preconstruction trust.
		(5)  "Trustee" means the trustee of a cemetery 
perpetual care trust fund.   
		(6)  "Undeveloped mausoleum space" means a crypt or 
niche in a mausoleum or mausoleum section that is designed to 
contain at least 10 crypt or niche interments and that is not ready 
for the interment of human remains or cremated remains on the date 
an interment right pertaining to the mausoleum space is sold.  The 
term does not include a private mausoleum or mausoleum section in 
which all mausoleum spaces are intended to be sold under a single 
contract.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 24, eff. Sept. 1, 1993;  Acts 
2005, 79th Leg., ch. 345, § 1, eff. Sept. 1, 2005;  Acts 2005, 
79th Leg., ch. 1290, § 1, eff. Sept. 1, 2005.


	§ 712.002. EXEMPTIONS FROM CHAPTER.  This chapter does 
not apply to:      
		(1)  a family, fraternal, or community cemetery that is 
not larger than 10 acres;
		(2)  an unincorporated association of plot owners not 
operated for profit;  
		(3)  a church, a religious society or denomination, or 
an entity solely administering the temporalities of a church or 
religious society or denomination;  or
		(4)  a public cemetery owned by this state, a county, or 
a municipality.    

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 25, eff. Sept. 1, 1993;  Acts 
2003, 78th Leg., ch. 562, § 36, eff. Sept. 1, 2003.


	§ 712.003. INCORPORATION REQUIRED;  MINIMUM CAPITAL.  (a) 
A perpetual care cemetery may not be operated in this state unless 
articles of incorporation are filed with the secretary of state 
showing:
		(1)  subscriptions and payments in cash for the 
corporation's full capital stock;
		(2)  the location of its perpetual care cemetery;  and                        
		(3)  a certificate showing the deposit in its fund of 
the minimum amount required under Section 712.004.
	(b)  A corporation chartered on or after September 5, 1955, 
and before September 1, 1993, must have a minimum capital of:
		(1)  $15,000, if the cemetery serves a municipality 
with a population of less than 15,000;
		(2)  $30,000, if the cemetery serves a municipality 
with a population of 15,000 to 25,000;  or
		(3)  $50,000, if the cemetery serves a municipality 
with a population of at least 25,000.
	(c)  A corporation chartered on or after September 1, 1993, 
must have a minimum capital of $75,000.
	(d)  A nonprofit association or corporation operated solely 
for the benefit of plot owners seeking to convert a cemetery to a 
perpetual care cemetery under this chapter is not required to meet 
the requirements prescribed by this section and Section 712.004 if 
the cemetery has existed for at least 75 years and the association 
or corporation has operated the cemetery for the preceding 10 
years.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1991, 72nd Leg., ch. 14, § 218, eff. Sept. 1, 1991;  Acts 
1993, 73rd Leg., ch. 634, § 26, eff. Sept. 1, 1993.


	§ 712.0031. NOTICES TO BANKING DEPARTMENT.  (a) Not later 
than the 30th day after the date a corporation files its articles of 
incorporation with the secretary of state, the corporation shall 
notify the banking department in writing of its intent to operate a 
perpetual care cemetery in this state.  The notice shall be 
accompanied by a filing fee of $500, shall be sworn to and verified 
under oath by all persons subscribing to the capital stock of the 
corporation, and shall contain:
		(1)  the information required to be provided to the 
secretary of state under Section 712.003;
		(2)  the names and addresses of any other persons or 
entities who are or will be beneficial owners of the capital stock 
of the corporation or otherwise share an interest in the ownership 
of the corporation's capital stock, or who have paid or will pay any 
portion of the consideration therefor;
		(3)  the name and address of any person or entity to 
whom the capital stock or assets of the corporation are or will be 
pledged as security for any loan;  and
		(4)  the name and address of the person who will 
actively manage the cemetery operations of the corporation along 
with a brief statement of that person's working experience in the 
cemetery industry.
	(b)  A cemetery operations manager must have at least two 
years of experience in cemetery management.
	(c)  If the corporation fails to provide to the banking 
department the information prescribed by Subsection (a), the 
commissioner may instruct the secretary of state to cancel the 
corporation's charter and serve notice of the cancellation on the 
corporation by registered or certified letter, addressed to the 
corporation's address.
	(d)  A corporation shall notify the commissioner in writing 
of any change in the controlling ownership interest of the capital 
stock of the corporation not later than the 30th day following the 
change of controlling ownership interest.

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


	§ 712.004. PERPETUAL CARE TRUST FUND REQUIRED.  (a) 
Before obtaining a corporate charter, the incorporators of a 
corporation chartered on or after September 3, 1945, and before 
September 1, 1993, must establish a fund by permanently depositing 
in cash with the trustee of the fund:
		(1)  $15,000, if the corporation has capital stock of 
$15,000;              
		(2)  $30,000, if the corporation has capital stock of 
$30,000;  or          
		(3)  $50,000, if the corporation has capital stock of 
$50,000 or more.      
	(b)  Before obtaining a corporate charter, the incorporators 
of a corporation chartered on or after September 1, 1993, must 
establish a fund by permanently depositing in cash with the trustee 
of the fund an amount of not less than $50,000 for each perpetual 
care cemetery operated in this state.
	(c)  The fund shall be permanently set aside and deposited in 
trust with the trustee in accordance with Subchapter B.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 28, eff. Sept. 1, 1993.


	§ 712.005. CANCELLATION OF CHARTER FOR FAILURE TO BEGIN 
OPERATION OF PERPETUAL CARE CEMETERY.  (a) If a corporation 
chartered under Section 712.003 does not begin actual operation of 
its perpetual care cemetery for six months after the charter is 
granted and delivered, the commissioner may instruct the secretary 
of state to cancel the charter and serve notice of the cancellation 
on the corporation by registered or certified letter, addressed to 
the corporation's address.
	(b)  The commissioner may rescind the order of cancellation 
on:              
		(1)  the application of the directors;                                        
		(2)  the payment to the commissioner of a penalty set by 
the commissioner in an amount not to exceed $500;
		(3)  the execution and delivery to the commissioner of 
an agreement to begin actual operation of the perpetual care 
cemetery not later than one month after the date of the agreement;  
and
		(4)  a proper showing by the trustee that the fund is on 
deposit.           
	(c)  If the corporation does not begin actual operation as 
agreed, the commissioner by order may set aside the order of 
rescission and the cancellation is final.  The commissioner shall 
make a full report of the cancellation to the attorney general for 
liquidation of the corporation, if liquidation is necessary.
	(d)  If no sale of the dedicated cemetery property of the 
corporation is made, a certified copy of the order of cancellation 
authorizes the trustee to refund the fund to the incorporators who 
signed the corporation's articles of incorporation.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 29, eff. Sept. 1, 1993.


	§ 712.007. NOTICE OF PERPETUAL CARE REQUIRED.  (a) A 
corporation shall post a sign at or near a cemetery entrance or 
administration building and readily accessible to the public.
	(b)  The sign must contain the following:                                      
		(1)  "Perpetual Care Cemetery," or "Endowment Care 
Cemetery";               
		(2)  the names and telephone numbers of two of the 
corporation's officers or directors;  and
		(3)  the name of each bank or trust company entrusted 
with the fund.        
	(c)  A corporation must include the following statement in 
each sales contract, certificate of ownership, or other instrument 
of conveyance of the exclusive right of sepulture:

"This cemetery is operated as a perpetual care 
cemetery, which means that a perpetual care fund for 
its maintenance has been established in conformity 
with the laws of the State of Texas.  Perpetual care 
means to maintain, repair, and care for the cemetery."
	(d)  The term "endowment care" may be substituted for the 
term "perpetual care" in the statement required by Subsection (c).

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 30, eff. March 1, 1994.


	§ 712.008. RULES.  (a) The Finance Commission of Texas 
may adopt rules to enforce and administer this chapter, including 
rules establishing fees to defray the costs of enforcing and 
administering this chapter.
	(b)  The Finance Commission of Texas shall adopt rules 
establishing reasonable standards for:
		(1)  timely placement of burial markers or monuments in 
a perpetual care cemetery;  and
		(2)  timely response to consumer complaints made to a 
corporation that operates a perpetual care cemetery.

Added by Acts 2001, 77th Leg., ch. 699, § 13, eff. Sept. 1, 2001.  
Amended by Acts 2003, 78th Leg., ch. 562, § 37, eff. Sept. 1, 
2003.


	§ 712.009. LIMITATIONS ON BURIALS;  DAMAGES.  (a) The 
Finance Commission of Texas shall adopt rules to administer and 
enforce this section.
	(b)  An individual, corporation, partnership, firm, trust, 
or association that operates or owns a perpetual care cemetery may 
not inter the remains of an individual who may have caused the death 
of another person if:
		(1)  the victim is interred in that cemetery;  and                            
		(2)  the person having the right to control the 
disposition of the victim's remains under Section 711.002(a) gives 
written notice to the cemetery requesting that the individual not 
be interred in that cemetery if:
			(A)  the individual was convicted under Section 
19.02, 19.03, 19.05, or 49.08, Penal Code, for causing the death of 
the victim, or convicted under a similar statute of another state;  
or
			(B)  the individual was identified as causing the 
death of the victim, in violation of a provision described by 
Paragraph (A), by the medical examiner or law enforcement agency 
having jurisdiction over the offense, and the individual dies 
before being convicted of the offense.
	(c)  An individual, corporation, partnership, firm, trust, 
or association that violates Subsection (b) is liable to the person 
having the right to control the disposition of the victim's remains 
under Section 711.002(a) for:
		(1)  any actual damages incurred;                                             
		(2)  punitive damages not to exceed $10,000;  and                             
		(3)  reasonable attorney's fees and court costs 
incurred in an effort to enforce compliance with Subsection (b).
	(d)  Damages under Subsection (c) may not be assessed if the 
individual, corporation, partnership, firm, trust, or association 
that operates the cemetery proves by a preponderance of the 
evidence that:
		(1)  the cemetery is the only cemetery serving the 
municipality or county in which the victim and individual causing 
the victim's death lived;  and
		(2)  the bodies of the victim and individual causing 
the victim's death were placed as far apart as possible in, or in 
different parts of, the cemetery.
	(e)  An individual, corporation, partnership, firm, trust, 
or association operating or owning a perpetual care cemetery and 
barred from interring remains of an individual under this section 
may not be held liable for damages by a person having the right to 
control the disposition of the individual's remains under Section 
711.002(a), including damages for failure to provide for interment 
under a contract executed before the delivery of the written notice 
under Subsection (b)(2).
	(f)  A notice under Subsection (b)(2) expires seven years 
after the date the notice is delivered.  A new notice may be 
delivered on the expiration of each previous notice.

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

SUBCHAPTER B. PERPETUAL CARE TRUST FUND


	§ 712.021. ESTABLISHMENT AND PURPOSES OF FUND.  (a) A 
corporation that operates a perpetual care cemetery in this state 
shall have a fund established with a trust company or a bank with 
trust powers that is located in this state.  The trust company or 
bank may not have more than one director who is also a director of 
the corporation.
	(b)  The principal of the fund may not be reduced 
voluntarily, and it must remain inviolable.  The trustee shall 
maintain the principal of the fund separate from all operating 
funds of the corporation.
	(c)  In establishing a fund, the corporation may adopt plans 
for the general care, maintenance, and embellishment of its 
perpetual care cemetery.
	(d)  The fund and the trustee are governed by the Texas Trust 
Code (Section 111.001 et seq., Property Code).
	(e)  A corporation that establishes a fund may receive and 
hold for the fund and as a part of the fund or as an incident to the 
fund any property contributed to the fund.
	(f)  The fund and contributions to the fund are for 
charitable purposes.  The perpetual care financed by the fund is:
		(1)  the discharge of a duty due from the corporation to 
persons interred and to be interred in its perpetual care cemetery;  
and
		(2)  for the benefit and protection of the public by 
preserving and keeping the perpetual care cemetery from becoming a 
place of disorder, reproach, and desolation in the community in 
which the perpetual care cemetery is located.
	(g)  The trustors of two or more perpetual care trust funds 
may establish a common trust fund in which deposits required by this 
chapter are made, provided that separate records of principal and 
income are maintained for each perpetual care cemetery for the 
benefit of which the common trust fund is established, and further 
provided that the income attributable to each perpetual care 
cemetery is used only for the perpetual care of that cemetery.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 31, eff. Sept. 1, 1993.


	§ 712.022. OPERATION OF PERPETUAL CARE CEMETERY.  A 
corporation authorized by law to operate a perpetual care cemetery 
but not doing so may do so if the corporation:
		(1)  notifies the commissioner;  and                                          
		(2)  establishes a fund as provided by Section 712.021 
in an amount equal to the larger of:
			(A)  the amount that would have been paid into the 
fund if the cemetery operated as a perpetual care cemetery from the 
date of the cemetery's first sale of plots;  or
			(B)  the minimum amount provided by Section 
712.004.                       

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 32, eff. Sept. 1, 1993.


	§ 712.023. VALIDITY OF CONTRIBUTIONS.  A contribution to 
a fund for perpetual care is not invalid because of:
		(1)  indefiniteness or uncertainty of the person 
designated as beneficiary in the instrument establishing the fund;  
or
		(2)  a violation of the law against perpetuities or the 
law against the suspension of the power of alienation of title to or 
use of property.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 33, eff. Sept. 1, 1993.


	§ 712.024. AMENDMENT OF TRUST INSTRUMENT.  A corporation 
and the trustee of a fund may, by agreement, amend the instrument 
that established the fund to include any provision that is 
consistent with this chapter.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 34, eff. Sept. 1, 1993.


	§ 712.025. USE OF FUND INCOME.  Fund income may be used 
only to provide the perpetual care described by the instrument that 
established the fund, including the general care and maintenance of 
the property entitled to perpetual care in the perpetual care 
cemetery.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 35, eff. Sept. 1, 1993;  Acts 
2003, 78th Leg., ch. 562, § 38, eff. Sept. 1, 2003.


	§ 712.026. SUIT BY PLOT OWNERS TO MAINTAIN PERPETUAL 
CARE.  (a) If the directors of a corporation do not generally care 
for and maintain the corporation's perpetual care cemetery, the 
district court of the county in which the perpetual care cemetery is 
located may:
		(1)  by injunction compel the directors to expend the 
net income of the corporation's fund as required by this chapter;  
or
		(2)  appoint a receiver to take charge of the fund and 
expend the net income of the fund as required by this chapter.
	(b)  The suit for relief under this section must be brought 
by at least five owners of plots located in the perpetual care 
cemetery.
	(c)  In a suit for relief under this section, court costs and 
attorney's fees shall be awarded:
		(1)  to the directors of the corporation, if it is found 
that the directors are substantially expending the available net 
income of the fund as required by this subchapter;  or
		(2)  to the plot owners initiating the suit, if it is 
found that the directors are not substantially expending the 
available net income of the fund as required by this subchapter.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 36, eff. Sept. 1, 1993;  Acts 
2001, 77th Leg., ch. 106, § 1, eff. Sept. 1, 2001.


	§ 712.027. INVESTMENT OF FUND.  (a) A trustee shall 
invest and manage the investment of the principal of a fund in 
accordance with the Texas Trust Code (Section 111.001 et seq., 
Property Code).
	(b)  An investment must be made at not more than the 
prevailing market value of the securities at the time of 
acquisition.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 37, eff. Sept. 1, 1993.


	§ 712.028. AMOUNT OF FUND DEPOSITS FROM SALES.  (a) A 
corporation shall deposit in its fund an amount that is at least:
		(1)  the greater of:                                                          
			(A)  $1.75 a square foot of ground area conveyed 
as perpetual care property;  or
			(B)  15 percent of the total purchase price of 
that ground area;           
		(2)  the greater of:                                                          
			(A)  $105 for each crypt interment right for 
mausoleum interment or lawn crypt interment conveyed as perpetual 
care property, or $60 for each crypt interment right if that crypt 
is accessible only through another crypt;  or
			(B)  seven percent of the total purchase price of 
that crypt interment right;  and
		(3)  the greater of:                                                          
			(A)  $35 for each niche interment right for 
columbarium interment conveyed;  or
			(B)  15 percent of the total purchase price of 
that niche interment right. 
	(b)  Subsection (a) does not apply to deposits from sales 
required to be made by a corporation in its fund before September 1, 
1993, under a corresponding statute in effect before that date.
	(c)  If a plot owner exchanges a plot for another plot in a 
corporation's perpetual care cemetery, the amount to be deposited 
in the corporation's fund in respect of the plot received by the 
plot owner in the exchange may be reduced by the amount deposited in 
the fund in respect of the plot contributed by the plot owner in the 
exchange.  The amount required to be deposited with respect to an 
exchanged plot is the amount required at the time the plot owner 
originally contracted to purchase the plot.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1991, 72nd Leg., ch. 14, § 219, eff. Sept. 1, 1991;  Acts 
1993, 73rd Leg., ch. 634, § 38, eff. Sept. 1, 1993;  Acts 2003, 
78th Leg., ch. 562, § 39, eff. Sept. 1, 2003.


	§ 712.029. ACCOUNTING FOR AND DEPOSITING AMOUNTS.  (a) 
The part of the purchase price of a plot in a perpetual care 
cemetery that is to be deposited in a fund must be shown separately 
on the original purchase agreement from the total purchase price.  A 
copy of the agreement shall be delivered to the purchaser of the 
plot.
	(b)  On the sale of a plot, a commission may not be paid to a 
broker or salesman on the amount to be deposited in the fund.
	(c)  A corporation shall deposit in its fund the amount 
required under Section 712.028 not later than the 20th day after the 
end of the month in which the original purchase agreement has been 
paid in full.  A corporation may prepay funds into its fund at any 
time and, if a surplus exists in the fund from the prepayments, may 
credit against the surplus the amounts otherwise required to be 
deposited in the fund under Section 712.028 until the surplus has 
been depleted.  In determining whether a surplus exists from 
prepayments, no part of the fund resulting from gifts to the fund 
under Section 712.030 may be considered.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1991, 72nd Leg., ch. 14, § 220, eff. Sept. 1, 1991;  Acts 
1993, 73rd Leg., ch. 634, § 39, eff. Sept. 1, 1993.


	§ 712.030. USE OF GIFT FOR SPECIAL CARE OF PLOT IN 
PERPETUAL CARE CEMETERY.  A trustee may take and hold property 
transferred to the trustee in trust in order to apply the principal, 
proceeds, or income of the property for any purpose consistent with 
the purpose of a corporation's perpetual care cemetery, including:
		(1)  the improvement or embellishment of any part of 
the perpetual care cemetery;
		(2)  the erection, renewal, repair, or preservation of 
a monument, fence, building, or other structure in the perpetual 
care cemetery;
		(3)  planting or cultivating plants in or around the 
perpetual care cemetery;  or
		(4)  taking special care of or embellishing a plot, 
section, or building in the perpetual care cemetery.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 40, eff. Sept. 1, 1993.

SUBCHAPTER C. REGULATION AND ENFORCEMENT


	§ 712.041. ANNUAL STATEMENT OF FUNDS.  (a) A corporation 
shall file in its office and with the commissioner a statement for 
each perpetual care cemetery operated in this state in duplicate 
that shows:
		(1)  the principal amount of its fund;                                        
		(2)  the amount of the fund invested in bonds and other 
securities;         
		(3)  the amount of cash on hand in the fund;                                  
		(4)  any other item that shows the financial condition 
of the fund;         
		(5)  the number of crypts, niches, and square feet of 
ground area conveyed under perpetual care before and after March 
15, 1934, listed separately;  and
		(6)  the number of crypts, niches, and square feet of 
ground area conveyed under perpetual care after March 15, 1934, for 
which the minimum deposits required for perpetual care have not 
been paid to the fund.
	(b)  The corporation's president and secretary, or two 
principal officers, shall verify the information on the statement.
	(c)  The corporation shall revise and post and file the 
statement on or before March 1 of each year.
	(d)  A copy of the statement shall be available to the public 
upon request.  

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 41, eff. Sept. 1, 1993.


	§ 712.042. FEES.  On filing a statement of funds under 
Section 712.041, a corporation shall pay the commissioner a 
reasonable and necessary fee set by rule adopted by the Finance 
Commission of Texas under Section 712.008 to defray the cost of 
administering this chapter.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1991, 72nd Leg., ch. 14, § 221, eff. Sept. 1, 1991;  Acts 
1993, 73rd Leg., ch. 634, § 42, eff. Sept. 1, 1993;  Acts 1995, 
74th Leg., ch. 914, § 6, eff. Sept. 1, 1995;  Acts 1999, 76th 
Leg., ch. 62, § 7.65, eff. Sept. 1, 1999;  Acts 2001, 77th Leg., 
ch. 699, § 15, eff. Sept. 1, 2001.


	§ 712.043. ADDITIONAL FUND REPORT.  The commissioner may 
require, as often as the commissioner determines necessary, the 
trustee of a corporation's fund to make under oath a detailed report 
of the condition of the fund.  The report must include:
		(1)  a detailed description of the assets of the fund;                        
		(2)  a description of securities held by the fund;                            
		(3)  if a security held by the fund is a lien, a 
description of the property against which the lien is taken;
		(4)  each security's acquisition cost;                                        
		(5)  each security's market value at the time of 
acquisition;               
		(6)  each security's current market value;                                    
		(7)  each security's status with reference to default;                        
		(8)  a statement that a security is not encumbered by 
debt;  and            
		(9)  any other information the commissioner determines 
is pertinent.        

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 43, eff. Sept. 1, 1993.


	§ 712.044. EXAMINATION OF RECORDS;  EXAMINATION FEES AND 
EXPENSES.   (a) The commissioner may examine, annually or more 
often as the commissioner reasonably considers necessary or 
appropriate to protect the interest of plot owners and efficiently 
administer and enforce this chapter:
		(1)  the books and records of a corporation relating to 
its fund, including deposits to or withdrawals from the fund, 
income of the fund, and uses and expenditures of that income;
		(2)  the books and records of a corporation relating to 
sales of undeveloped mausoleum spaces and any preconstruction trust 
established by the corporation as provided by Section 712.063, 
including deposits to or withdrawals from the preconstruction 
trust, income of the preconstruction trust, and uses and 
expenditures of principal and income of the preconstruction trust;  
and
		(3)  the consumer complaint files of a corporation 
relating to the fund, sales of undeveloped mausoleum spaces, a 
preconstruction trust, or to discharge of the corporation's 
perpetual care responsibilities, minutes of the corporation's 
board of directors, cemetery dedication statements and plat maps, 
and mausoleum and lawn crypt construction contracts and 
specifications.
	(b)  A corporation that is examined under this section shall 
make the specified books and records available for examination by 
the banking department upon reasonable notice to the corporation 
and shall pay to the commissioner for the examination a reasonable 
and necessary fee set by rules adopted by the Finance Commission of 
Texas under Section 712.008 to defray:
		(1)  the cost of examination;                                                 
		(2)  the equitable or proportionate cost of maintenance 
and operation of the department;  and
		(3)  the cost of administering and enforcing this 
chapter.                  

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 44, eff. Sept. 1, 1993;  Acts 
2001, 77th Leg., ch. 699, § 16, eff. Sept. 1, 2001;  Acts 2005, 
79th Leg., ch. 345, § 2, eff. Sept. 1, 2005;  Acts 2005, 79th 
Leg., ch. 1290, § 2, eff. Sept. 1, 2005.


	§ 712.0441. ENFORCEMENT.  (a) After notice and 
opportunity for hearing, the commissioner may impose an 
administrative penalty on a person who:
		(1)  violates this chapter or a final order of the 
commissioner or rule of the Finance Commission of Texas and does not 
correct the violation before the 31st day after the date the person 
receives written notice of the violation from the banking 
department;  or
		(2)  engages in a pattern of violations, as determined 
by the commissioner. 
	(b)  The amount of the penalty for each violation may not 
exceed $1,000 for each day the violation occurs.
	(c)  In determining the amount of the penalty, the 
commissioner shall consider the seriousness of the violation, the 
person's history of violations, and the person's good faith in 
attempting to comply with this chapter.  The imposition of a penalty 
under this section is subject to judicial review as a contested case 
under Chapter 2001, Government Code.  The commissioner may collect 
the penalty in the same manner that a money judgment is enforced in 
district court.
	(d)  In addition to any penalty that may be imposed under 
Subsection (a), the commissioner may bring a civil action against a 
corporation to enjoin a violation described in Subsection (a) that 
has not been corrected within 30 days after the receipt by the 
corporation of written notice from the commissioner of the 
violation.  Any such civil action may be brought in the district 
court of the county in which the corporation's perpetual care 
cemetery is operated.
	(e)  The commissioner may issue an order to cease and desist 
if a violation described in Subsection (a) has not been corrected 
within 30 days after the receipt by the corporation of written 
notice from the commissioner of the violation.  Any order proposed 
under this subsection shall be served upon the corporation, shall 
state the grounds for the proposed order with reasonable certainty, 
and shall state the proposed effective date, which shall not be less 
than 15 days after receipt by the corporation.  Unless the 
corporation shall request a hearing within 15 days after such 
receipt, the order shall become effective as proposed.  If the 
corporation requests a hearing, it shall be conducted in accordance 
with the procedures for a contested case hearing under the 
Administrative Procedure and Texas Register Act.
	(f)  The commissioner may issue an order requiring 
restitution by a corporation to its fund or to a preconstruction 
trust if, after notice and opportunity for hearing held in 
accordance with the procedures for a contested case hearing under 
the Administrative Procedure and Texas Register Act, the 
commissioner finds that the corporation has not made a deposit in 
the fund as required by Section 712.028 or in the preconstruction 
trust as required by Section 712.063.
	(g)  If a violation described in Subsection (a) has not been 
corrected with  90 days after the receipt of written notice by the 
corporation from the commissioner of the violation, the 
commissioner may report the violation to the attorney general, who 
shall bring suit or quo warranto proceedings for the forfeiture of 
the corporation's charter and dissolution of the corporation in the 
district court of any county in which its perpetual care cemetery is 
operated.
	(h)  If a fund is misappropriated by its trustee or is not 
otherwise handled as required by this chapter, the commissioner may 
take action against the trustee as provided in Chapter 185, Finance 
Code.

Added by Acts 1993, 73rd Leg., ch. 634, § 45, eff. Sept. 1, 1993.  
Amended by Acts 1997, 75th Leg., ch. 769, § 3, eff. Sept. 1, 
1997;  Acts 1999, 76th Leg., ch. 62, § 7.66, eff. Sept. 1, 1999;  
Acts 2001, 77th Leg., ch. 699, § 17, eff. Sept. 1, 2001;  Acts 
2005, 79th Leg., ch. 345, § 3, eff. Sept. 1, 2005;  Acts 2005, 
79th Leg., ch. 1290, § 3, eff. Sept. 1, 2005.


	§ 712.0442. PATTERN OF WILFUL DISREGARD.  (a) If, after a 
hearing conducted as provided by Chapter 2001, Government Code, the 
trier of fact finds that a violation of this chapter or a rule of the 
Finance Commission of Texas establishes a pattern of wilful 
disregard for the requirements of this chapter or rules of the 
finance commission, the trier of fact shall recommend to the 
commissioner that the maximum administrative penalty permitted 
under Section 712.0441 be imposed on the person committing the 
violation or that the commissioner cancel or not renew the person's 
permit under Chapter 154, Finance Code, if the person holds such a 
permit.
	(b)  For the purposes of this section, violations corrected 
as provided by Section 712.0441 may be included in determining 
whether a pattern of wilful disregard for the requirements of this 
chapter or rules of the finance commission exists.

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


	§ 712.048. CRIMINAL PENALTIES.  (a) A person who is an 
individual, firm, association, corporation, or municipality, or an 
officer, agent, or employee of an individual, firm, association, 
corporation, or municipality, commits an offense if the person 
sells, offers to sell, or advertises for sale an interment right in 
a plot and, before a fund is established for the cemetery in which 
the plot is located as provided by this chapter, represents that the 
plot is under perpetual care.  An offense under this subsection is a 
Class A misdemeanor.  This subsection does not prevent an aggrieved 
party or the attorney general from maintaining a civil action for 
the recovery of damages caused by an injury resulting from an 
offense under this subsection.
	(b)  A person who is an individual, firm, association, 
corporation, or municipality, or an officer, agent, or employee of 
an individual, firm, association, corporation, or municipality, 
commits an offense if the person knowingly defalcates or 
misappropriates assets of a fund.  An offense under this subsection 
is punishable as if it were an offense under Section 32.45, Penal 
Code.

Acts 1989, 71st Leg., ch. 678, § 1, eff. Sept. 1, 1989.  Amended 
by Acts 1993, 73rd Leg., ch. 634, § 46, eff. Sept. 1, 1993.

SUBCHAPTER D. SALE OF UNDEVELOPED MAUSOLEUM SPACE


	§ 712.061. OFFER AND SALE OF UNDEVELOPED MAUSOLEUM 
SPACE.  (a) A corporation may not directly or indirectly sell or 
offer for sale an undeveloped mausoleum space unless before the 
sale or offer the corporation:
		(1)  establishes a preconstruction trust as provided by 
Section 712.063 or executes and submits a performance bond payable 
to the commissioner as provided by Section 712.067;  and
		(2)  submits a written notice to the commissioner as 
required by Subsection (b).
	(b)  The written notice to the commissioner must set forth:                    
		(1)  the date the corporation anticipates that sales of 
undeveloped mausoleum spaces will begin;
		(2)  a copy of the sales contract proposed for use that 
complies with Section 712.066;
		(3)  if the corporation establishes a preconstruction 
trust as provided by Section 712.063, a copy of the executed 
preconstruction trust agreement that complies with this subchapter 
and identifies the preconstruction trustee;
		(4)  if the corporation submits a performance bond 
payable to the commissioner as provided by Section 712.067, the 
executed, original performance bond in the amount required by 
Section 712.067 and documentation supporting the corporation's 
computation of that amount;  and
		(5)  other information the commissioner reasonably 
requires to properly administer and enforce this subchapter.
	(c)  At any time before beginning construction of the 
mausoleum or mausoleum section in which undeveloped mausoleum 
spaces are being sold, a corporation that has established a 
preconstruction trust may substitute a performance bond that meets 
the requirements of Section 712.067.  On acceptance of the 
performance bond by the commissioner, the corporation may terminate 
and withdraw all proceeds deposited in the preconstruction trust.

Added by Acts 2005, 79th Leg., ch. 345, § 4, eff. Sept. 1, 2005;  
Acts 2005, 79th Leg., ch. 1290, § 4, eff. Sept. 1, 2005.


	§ 712.062. DEPOSITS TO FUND.  This subchapter does not 
affect the corporation's obligation to make deposits to its fund as 
provided in Subchapter B.

Added by Acts 2005, 79th Leg., ch. 345, § 4, eff. Sept. 1, 2005;  
Acts 2005, 79th Leg., ch. 1290, § 4, eff. Sept. 1, 2005.


	§ 712.063. PRECONSTRUCTION TRUST.  (a) Except as provided 
by Section 712.067, a corporation that intends to directly or 
indirectly sell or offer for sale undeveloped mausoleum spaces 
shall establish a preconstruction trust by written declaration and 
agreement appointing as preconstruction trustee a financial 
institution with trust powers that is located in this state.
	(b)  The corporation shall deposit in the preconstruction 
trust an amount equal to at least 40 percent of all proceeds 
received directly or indirectly from the sale of undeveloped 
mausoleum spaces, not including interest, finance charges, sales 
taxes, credit life insurance premiums, or deposits to the 
corporation's fund required by Section 712.029(c).
	(c)  On application, the commissioner may authorize a 
corporation to deposit less than the amount required by Subsection 
(b) if the corporation demonstrates to the reasonable satisfaction 
of the commissioner that:
		(1)  the sales projections of the corporation are 
prudent and based on reasonable assumptions;
		(2)  the projected cost of construction is objectively 
determined based on documentation similar to that required by 
Section 712.067(b);  and
		(3)  the amount of money projected to be deposited in 
the preconstruction trust under the proposed lesser amount will 
equal or exceed 120 percent of the cost of constructing the 
mausoleum or mausoleum section.
	(d)  The corporation shall deposit the required amount into 
the preconstruction trust on or before the 30th day after the end of 
the month in which payment is received.  At the time of making a 
deposit, the corporation shall furnish to the preconstruction 
trustee the name of each payor and the amount of payment on each 
account for which the deposit is being made.  A contract between the 
corporation and an agent or third party developer may not restrict 
or waive the corporation's primary liability for making the 
deposits required by this section.
	(e)  The preconstruction trustee may commingle deposits 
received if the accounting records accurately establish a separate 
account for each contract and reflect the amounts deposited and the 
income and loss allocable to each contract.
	(f)  Money in a preconstruction trust may be invested only 
in:               
		(1)  demand deposits, savings accounts, certificates 
of deposit, or other accounts in financial institutions if the 
amounts deposited in those accounts are fully covered by federal 
deposit insurance or otherwise fully secured by a separate fund of 
securities in the manner provided by Section 184.301, Finance Code;
		(2)  marketable notes, bonds, evidences of 
indebtedness, or obligations with a term to maturity of five years 
or less and:
			(A)  issued by the United States or an 
instrumentality of the United States;  or
			(B)  the principal and interest of which are 
guaranteed by the full faith and credit of the United States;  and
		(3)  a mutual fund the portfolio of which consists 
wholly of investments permitted by Subdivisions (1) and (2).
	(g)  The preconstruction trustee may withdraw money from 
earnings on a preconstruction trust for the purpose of paying 
reasonable and necessary costs of operation of the preconstruction 
trust, including trustee or depository fees and expenses, and any 
special examination fees due to the department related to an 
examination of the preconstruction trust that is not incidental to 
examination of the corporation's fund.  With the department's prior 
approval, the corporation may withdraw money from earnings on a 
preconstruction trust to pay any tax incurred because of the 
existence of the preconstruction trust.
	(h)  The preconstruction trust and the preconstruction 
trustee are governed by Subtitle B, Title 9, Property Code.

Added by Acts 2005, 79th Leg., ch. 345, § 4, eff. Sept. 1, 2005;  
Acts 2005, 79th Leg., ch. 1290, § 4, eff. Sept. 1, 2005.


	§ 712.064. CONSTRUCTION;  DEFAULT.  (a) The corporation 
shall start construction of the mausoleum or mausoleum section in 
which sales or reservations for sale of undeveloped mausoleum 
spaces are being made on or before a date that is 48 months after the 
date of the first of those sales or reservations and shall complete 
construction on or before a date that is 60 months after the date of 
the first of those sales or reservations.  The commissioner may 
grant extensions for good cause shown.
	(b)  If construction of a mausoleum or mausoleum section 
related to an undeveloped mausoleum space has not begun or been 
completely constructed by the applicable time specified by 
Subsection (a), on the written request of the buyer, the 
corporation and the preconstruction trustee shall, on or before the 
30th day after the date of the buyer's request, refund the entire 
amount paid for the undeveloped mausoleum space plus, if the 
corporation established a preconstruction trust, net income earned 
on that portion of the money deposited in the preconstruction 
trust.  The corporation is liable to a buyer for any portion of the 
purchase price paid for undeveloped mausoleum spaces that was not 
deposited in the preconstruction trust.

Added by Acts 2005, 79th Leg., ch. 345, § 4, eff. Sept. 1, 2005;  
Acts 2005, 79th Leg., ch. 1290, § 4, eff. Sept. 1, 2005.


	§ 712.065. RELEASE OF TRUST FUNDS TO CORPORATION.  (a) On 
completion of construction of a mausoleum or mausoleum section 
subject to this subchapter, the corporation may withdraw all money 
deposited in the preconstruction trust and the net income earned on 
the money after submitting to the preconstruction trustee a sworn 
affidavit of completion executed by an officer or agent of the 
corporation on a form prescribed by the department.
	(b)  During construction of the mausoleum or mausoleum 
section containing the undeveloped mausoleum spaces, the 
corporation may periodically withdraw from the preconstruction 
trust an amount equal to the previously unreimbursed cost of 
performed labor or delivered materials after submitting to the 
preconstruction trustee a sworn affidavit of expenditures for 
construction cost executed by an officer or agent of the 
corporation on a form prescribed by the department.
	(c)  If the corporation delivers a completed mausoleum space 
acceptable to the buyer in lieu of the undeveloped mausoleum space 
purchased, the corporation may withdraw all money deposited to the 
preconstruction trust for that buyer and related income earned on 
the money after submitting to the preconstruction trustee a sworn 
affidavit of performance executed by an officer or agent of the 
corporation on a form prescribed by the department.
	(d)  The corporation shall maintain copies of the affidavits 
required by this section for examination by the department.

Added by Acts 2005, 79th Leg., ch. 345, § 4, eff. Sept. 1, 2005;  
Acts 2005, 79th Leg., ch. 1290, § 4, eff. Sept. 1, 2005.


	§ 712.066. CONTRACT DISCLOSURES.  (a) A sales contract 
for an undeveloped mausoleum space, whether in English or Spanish, 
must inform the buyer:
		(1)  that the buyer by written notice may cancel the 
contract for the failure of the corporation or its agent or 
contractor to construct the mausoleum or mausoleum section 
containing the undeveloped mausoleum space within the time limits 
specified by Section 712.064(a) and receive a refund of the entire 
amount paid under the contract for the undeveloped mausoleum space 
plus, if the corporation established a preconstruction trust, net 
income earned on that portion of the money deposited in the 
preconstruction trust, as provided by Section 712.064(b);
		(2)  of the options available under a fully paid 
contract in the event that the person to be interred in the 
undeveloped mausoleum space dies before completion of the related 
mausoleum or mausoleum section, which may include an option to:
			(A)  select a replacement mausoleum space or other 
interment that is acceptable to the buyer or buyer's 
representative;  or
			(B)  elect temporary interment of the human 
remains or cremated remains in an existing mausoleum space until 
the undeveloped mausoleum space is completed, at which time the 
corporation shall disinter and reinter the human remains or 
cremated remains at no additional charge;  and
		(3)  if the corporation does not offer a temporary 
interment option and the buyer does not accept a replacement 
mausoleum space or other interment, that the buyer or the buyer's 
representative by written notice may cancel the contract and 
receive a refund of the entire amount paid under the contract for 
the undeveloped mausoleum space plus, if the corporation 
established a preconstruction trust, net income earned on that 
portion of the money deposited in the preconstruction trust, as 
provided by Section 712.064(b).
	(b)  A corporation's sales contract for undeveloped 
mausoleum space must comply with applicable regulations of the 
Federal Trade Commission, including 16 C.F.R. Section 433.2, with 
respect to a contract payable in installments.
	(c)  Required notices to buyers must be written in plain 
language designed to be easily understood by the average consumer 
and be printed in an easily readable font and type size.

Added by Acts 2005, 79th Leg., ch. 345, § 4, eff. Sept. 1, 2005;  
Acts 2005, 79th Leg., ch. 1290, § 4, eff. Sept. 1, 2005.


	§ 712.067. BOND IN LIEU OF PRECONSTRUCTION TRUST.  (a) In 
lieu of establishing the preconstruction trust required by Section 
712.063, a corporation may execute and submit a bond issued by a 
surety company authorized to do business in this state and 
reasonably acceptable to the commissioner.  The bond must be 
payable to the commissioner and conditioned on the faithful 
performance of the contracts for sale of undeveloped mausoleum 
spaces.
	(b)  The amount of the bond must equal or exceed 120 percent 
of the cost of construction of the related mausoleum or mausoleum 
section.  The cost of construction of the mausoleum or mausoleum 
section must be based on:
		(1)  estimates of the design architect and two or more 
bids for the construction from qualified contractors authorized to 
do business in this state;
		(2)  the actual cost of construction set forth in an 
executed contract with a qualified contractor authorized to do 
business in this state;  or
		(3)  if the corporation intends to construct the 
mausoleum or mausoleum section itself, an amount equal to 120 
percent of the estimated cost of construction, including direct and 
allocated labor and material costs.
	(c)  At any time before beginning construction of the 
mausoleum or mausoleum section in which undeveloped mausoleum 
spaces are being sold, a corporation that has submitted a 
performance bond may establish a preconstruction trust that meets 
the requirements of Section 712.063.  On acceptance of the 
substituted preconstruction trust by the commissioner, the 
corporation may terminate and withdraw the previously submitted 
performance bond.

Added by Acts 2005, 79th Leg., ch. 345, § 4, eff. Sept. 1, 2005;  
Acts 2005, 79th Leg., ch. 1290, § 4, eff. Sept. 1, 2005.


	§ 712.068. REPORTS.  On or before the date the 
corporation's annual statement of funds is due as required by 
Section 712.041, the corporation shall cause the preconstruction 
trustee to file with the department, in the form prescribed by the 
department, a full and true statement regarding the activities of 
any preconstruction trust that was subject to this subchapter at 
any time during the preceding calendar year.

Added by Acts 2005, 79th Leg., ch. 345, § 4, eff. Sept. 1, 2005;  
Acts 2005, 79th Leg., ch. 1290, § 4, eff. Sept. 1, 2005.