H.B. No. 2495

	AN ACT
	relating to cemeteries and perpetual care cemetery corporations;
	providing a penalty.
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
	SECTION 1.  Section 711.001(3), Health and Safety Code, is
	amended to read as follows:
	(3)  "Cemetery organization" means:
	(A)  an unincorporated association of plot owners
	not operated for profit that is authorized by its articles of
	association to conduct a business for cemetery purposes; or
	(B)  a corporation, as defined by Section
	712.001(b)(3) [either for profit or not for profit], that is
	authorized by its certificate of formation or its registration
	[articles of incorporation] to conduct a business for cemetery
	purposes.
	SECTION 2.  Section 711.002, Health and Safety Code, is
	amended by adding Subsection (a-1) to read as follows:
	(a-1)  If the person with the right to control the
	disposition of the decedent's remains fails to make final
	arrangements or appoint another person to make final arrangements
	for the disposition before the earlier of the 6th day after the date
	the person received notice of the decedent's death or the 10th day
	after the date the decedent died, the person is presumed to be
	unable or unwilling to control the disposition, and:
	(1)  the person's right to control the disposition is
	terminated; and
	(2)  the right to control the disposition is passed to
	the following persons in the following priority:
	(A)  any other person in the same priority class
	under Subsection (a) as the person whose right was terminated; or
	(B)  a person in a different priority class, in
	the priority listed in Subsection (a).
	SECTION 3.  Section 711.061, Health and Safety Code, is
	amended to read as follows:
	Sec. 711.061.  REQUIREMENTS FOR LAWN CRYPTS. (a) A lawn
	crypt may not be installed unless:
	(1)  the lawn crypt is constructed of concrete and
	reinforced steel or other comparably durable material;
	(2)  the lawn crypt is installed on not less than six
	inches of rock, gravel, or other drainage material;
	(3)  the lawn crypt provides a method to drain water out
	of the lawn crypt;
	(4)  the outside top surface of the lawn crypt at the
	time of installation is at least 1-1/2 feet below the surface of the
	ground as required by Section 714.001(a)(2) and is capable of
	withstanding the weight of the soil and sod above the top surface
	and the weight of machinery and equipment normally used in the
	maintenance of the cemetery;
	(5)  the lawn crypt is installed in a garden or other
	section of the cemetery that has been dedicated for lawn crypt
	interment purposes in accordance with Section 711.034; and
	(6)  [except as provided by Section 711.062,] the lawn
	crypt is installed in multiple units of 10 or more or as prescribed
	by Subsection (b).
	(b)  A lawn crypt that is part of a private estate may be
	installed in fewer than 10 units.  For purposes of this subsection,
	a private estate is a small section of a cemetery that has the
	following characteristics:
	(1)  is sold under a single contract;
	(2)  is usually offset from other burial sites;
	(3)  allows for interment of several members of the
	same family or their designees; and
	(4)  is identified on the plat for cemetery property as
	a private estate in accordance with Section 711.034.
	SECTION 4.  Subchapter E, Chapter 711, Health and Safety
	Code, is amended by adding Sections 711.063 and 711.064 to read as
	follows:
	Sec. 711.063.  CONSTRUCTION; DEFAULT. (a) A cemetery in
	which undeveloped lawn crypt spaces are being sold or reserved for
	sale shall begin construction on the lawn crypt section not later
	than 48 months after the date of the first sale or reservation,
	whichever is earlier, and must complete construction not later than
	60 months after the date of the first sale or reservation, whichever
	is earlier.
	(b)  If construction of a lawn crypt section described by
	Subsection (a) does not begin or has not been completed by the dates
	specified in Subsection (a), on the buyer's written request, the
	cemetery shall refund the entire amount paid for the undeveloped
	lawn crypt space not later than the 30th day after the date of the
	buyer's request.
	Sec. 711.064.  CONTRACT DISCLOSURES. (a) A sales contract
	for an undeveloped lawn crypt space must contain terms, whether in
	English or Spanish, that inform the buyer:
	(1)  that the buyer may, after providing written
	notice, cancel the contract for failure by the cemetery or
	contractor to construct the lawn crypt space within the time limits
	specified by Section 711.063(a) and receive a refund of the entire
	amount paid under the contract for the undeveloped lawn crypt space
	as described by Section 711.063(b); and
	(2)  of the options available under a fully paid
	contract if the person to be interred in the undeveloped lawn crypt
	space dies before completion of the related lawn crypt section,
	including the option to:
	(A)  select a replacement lawn crypt space or
	other interment acceptable to the buyer or the buyer's
	representative;
	(B)  elect temporary interment of the human
	remains or cremated remains in an existing mausoleum space until
	the undeveloped lawn crypt space is completed, at which time the
	cemetery shall disinter and reinter the human remains or cremated
	remains at no additional charge to the buyer; or
	(C)  cancel the contract on written notice of the
	buyer or the buyer's representative and receive a refund of the
	entire amount paid under the contract for the undeveloped lawn
	crypt space if:
	(i)  the cemetery does not offer a temporary
	interment option; or
	(ii)  the buyer or the buyer's
	representative does not accept a replacement lawn crypt or other
	interment.
	(b)  A sales contract for undeveloped lawn crypt 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)  Each notice required by this section must be written in
	plain language designed to be easily understood by the average
	consumer and must be printed in an easily readable font and type
	size.
	SECTION 5.  Section 712.001(b)(3), Health and Safety Code,
	is amended to read as follows:
	(3)  "Corporation" means a filing entity or foreign
	filing entity, as those terms are defined by Section 1.002,
	Business Organizations Code, or an entity [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.
	SECTION 6.  The heading to Section 712.003, Health and
	Safety Code, is amended to read as follows:
	Sec. 712.003.  REGISTRATION [INCORPORATION] REQUIRED;
	MINIMUM CAPITAL.
	SECTION 7.  Section 712.003(a), Health and Safety Code, is
	amended to read as follows:
	(a)  A perpetual care cemetery may not be operated in this
	state unless a certificate of formation for a domestic filing
	entity or registration to transact business for a foreign filing
	entity is [articles of incorporation are] filed with the secretary
	of state showing:
	(1)  subscriptions and payments in cash for 100 percent
	of the entity's ownership or membership interests [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.
	SECTION 8.  Subchapter A, Chapter 712, Health and Safety
	Code, is amended by adding Sections 712.0032 through 712.00395 to
	read as follows:
	Sec. 712.0032.  CERTIFICATE OF AUTHORITY REQUIREMENT. A
	corporation must hold a certificate of authority issued under this
	chapter to operate a perpetual care cemetery.
	Sec. 712.0033.  CERTIFICATE OF AUTHORITY APPLICATION; FEES.
	(a) To obtain a certificate of authority to operate a perpetual care
	cemetery, an applicant must, not later than the 30th day after the
	date a corporation files its certificate of formation or
	application for registration with the secretary of state:
	(1)  file an application, made under oath, on a form
	prescribed by the department; and
	(2)  pay a filing fee in an amount set by the Finance
	Commission of Texas under Section 712.008.
	(b)  If the corporation fails to comply with Subsection (a),
	the commissioner may instruct the secretary of state to remove the
	corporation from the secretary's active records or cancel the
	corporation's registration. On an instruction from the
	commissioner under this subsection, the secretary of state shall
	remove the corporation from the secretary's active records or
	cancel the corporation's registration and serve notice of the
	cancellation on the corporation by registered or certified letter,
	addressed to the corporation's address.
	(c)  A fee or cost paid under this chapter in connection with
	an application or renewal is not refundable.
	Sec. 712.0034.  QUALIFICATIONS FOR CERTIFICATE OF
	AUTHORITY; INVESTIGATION. (a) The commissioner may investigate an
	applicant before issuing a certificate of authority.
	(b)  To qualify for a certificate of authority under this
	chapter, an applicant must demonstrate to the satisfaction of the
	commissioner that:
	(1)  the applicant's business ability, experience,
	character, financial condition, and general fitness warrant the
	public's confidence;
	(2)  the cemetery operations manager has at least two
	years of experience in cemetery management;
	(3)  the issuance of the certificate of authority is in
	the public interest;
	(4)  the applicant, a principal of the applicant, or a
	person who controls the applicant does not owe the department a
	delinquent fee, assessment, administrative penalty, or other
	amount imposed under this chapter or a rule adopted or order issued
	under this chapter; and
	(5)  the applicant corporation:
	(A)  is in good standing and statutory compliance
	with this state;
	(B)  is authorized to engage in the perpetual care
	cemetery business in this state; and
	(C)  does not owe any delinquent franchise or
	other taxes to this state.
	Sec. 712.0035.  ISSUANCE OF CERTIFICATE OF AUTHORITY. (a)
	The commissioner shall issue a certificate of authority if the
	commissioner finds that:
	(1)  the applicant meets the qualifications listed in
	Section 712.0034 and it is reasonable to believe that the
	applicant's cemetery business will be conducted fairly and
	lawfully, according to applicable state and federal law, and in a
	manner commanding the public's trust and confidence;
	(2)  the issuance of the certificate of authority is in
	the public interest;
	(3)  the documentation and forms required to be
	submitted by the applicant are acceptable; and
	(4)  the applicant has satisfied all requirements for
	issuance of a certificate of authority.
	(b)  The applicant is entitled, on request, to a hearing on a
	denial of the application. The request must be filed with the
	commissioner not later than the 30th day after the date the notice
	of denial is mailed. The hearing must be held not later than the
	60th day after the date of the request unless the administrative law
	judge extends the period for good cause or the parties agree to a
	later hearing date. The hearing is a contested case under Chapter
	2001, Government Code.
	Sec. 712.0036.  TERM OF CERTIFICATE OF AUTHORITY. An
	initial certificate of authority expires March 1 of the year after
	the year the certificate is issued. The certificate must be renewed
	at that time and by March 1 of each following year.
	Sec. 712.0037.  RENEWAL OF CERTIFICATE OF AUTHORITY. (a) As
	a condition of renewal, a certificate holder must meet the
	qualifications and satisfy the requirements that apply to an
	applicant for a new certificate of authority.  Additionally, not
	later than the certificate's annual renewal date, a certificate
	holder shall:
	(1)  pay an annual renewal fee in an amount established
	by Finance Commission of Texas rule; and
	(2)  submit a renewal report under oath and in the form
	and medium required by the commissioner that demonstrates that the
	certificate holder meets the qualifications and requirements for
	holding a certificate.
	(b)  If the department does not receive a certificate
	holder's renewal fee and complete renewal report on or before the
	certificate's renewal date, the commissioner:
	(1)  shall notify the certificate holder in writing
	that the certificate holder must submit the renewal report and pay
	the renewal fee not later than the 30th day after the certificate's
	renewal date; and
	(2)  may require the certificate holder to pay a late
	fee, in an amount established by Finance Commission of Texas rule
	and not subject to appeal, for each business day after the
	certificate's renewal date that the commissioner does not receive
	the completed renewal report and renewal fee.
	(c)  On timely receipt of a certificate holder's complete
	renewal report and renewal fee and any late fee, the department
	shall review the report and the commissioner may:
	(1)  renew the certificate of authority; or
	(2)  refuse to renew the certificate of authority and
	take other action the commissioner considers appropriate.
	(d)  The applicant on request is entitled to a hearing to
	contest the commissioner's refusal to renew the certificate. The
	request must be filed with the commissioner not later than the 30th
	day after the date the notice of refusal to renew is mailed. The
	hearing is a contested case under Chapter 2001, Government Code.
	(e)  The holder or principal of or the person in control of
	the holder of an expired certificate of authority, or the holder or
	principal of or person in control of the holder of a certificate of
	authority surrendered under Section 712.00395, who wishes to
	conduct activities for which a certificate of authority is required
	under this chapter shall file a new application for a certificate of
	authority and satisfy all requirements for the certificate that
	apply at the time the new application is filed.
	Sec. 712.0038.  TRANSFER OR ASSIGNMENT PROHIBITED. A
	certificate of authority issued under this chapter may not be
	transferred or assigned.
	Sec. 712.0039.  TRANSFER OF BUSINESS OWNERSHIP; CHANGE OF
	CONTROL. (a) A certificate holder shall notify the department in
	writing of a transfer of ownership of the certificate holder's
	business or a transfer of 25 percent or more of the stock or other
	ownership or membership interest of the corporation as follows:
	(1)  in the case of a voluntary transfer, not later than
	the seventh day after the date the contract for transfer is
	executed; and
	(2)  in the case of an involuntary transfer, not later
	than one business day after receiving notice of the impending
	foreclosure or other involuntary transfer.
	(b)  If the proposed transferee is not a certificate holder,
	the proposed transferee shall file any necessary documents with the
	secretary of state and an application for a certificate of
	authority with the department as required by this chapter. The
	transfer of the perpetual care fund may not occur until after the
	date a certificate of authority is issued to the transferee
	applicant.
	(c)  If the commissioner denies the application, a hearing
	may be requested and conducted according to the procedures in
	Section 712.0035(b).
	Sec. 712.00395.  SURRENDER OF CERTIFICATE OF AUTHORITY; FEE.
	(a) A certificate holder may apply to the commissioner for
	permission to surrender the certificate of authority if the holder:
	(1)  is a cemetery that qualified for an exemption
	under Section 711.021(g), but voluntarily elected to become a
	perpetual care cemetery;
	(2)  has performed not more than 10 burials per year
	during each of the last five years;
	(3)  is not larger than 10 acres; and
	(4)  has a perpetual care fund that is less than
	$30,000.
	(b)  The application for permission to surrender a
	certificate of authority must be sworn to and be on a form
	prescribed by the department.
	(c)  The certificate holder shall publish a notice of
	intention to surrender a certificate of authority to operate a
	perpetual care cemetery one time in a newspaper of general
	circulation in each county in which the cemetery is located. The
	notice must:
	(1)  be in the form and include the information
	required by the banking commissioner;
	(2)  state that:
	(A)  the certificate holder is applying to
	surrender the holder's certificate of authority to operate a
	perpetual care cemetery;
	(B)  a cemetery plot owner or cemetery plot
	owner's heir may request a hearing to contest the surrender; and
	(C)  a request for a hearing must be filed with the
	department not later than the 14th day after the date the notice is
	published.
	(d)  The certificate holder shall submit, not later than the
	seventh day after the date the notice is published, a publisher's
	affidavit evidencing publication of the notice.
	(e)  If a request for hearing is timely filed by a plot owner
	or plot owner's heir, the commissioner shall hold a hearing in
	accordance with Chapter 2001, Government Code.
	(f)  If a request for a hearing is not timely filed by a plot
	owner or plot owner's heir, the commissioner may approve or deny the
	application.
	(g)  If an application is denied, and if a hearing is not held
	before the denial, the applicant may request a hearing to appeal the
	denial of the application. The applicant's request for a hearing
	must be filed with the commissioner not later than the 30th day
	after the date the notice of denial is mailed. The hearing is a
	contested case under Chapter 2001, Government Code.
	(h)  An order approving the surrender of a certificate of
	authority must impose four conditions that are not subject to
	objection. Failure to satisfy any of these conditions constitutes
	a violation of the commissioner's order, and the certificate holder
	is subject to an enforcement action under this chapter. The order
	approving the surrender must:
	(1)  require the perpetual care fund to remain in an
	irrevocable trust, with the income to be used for perpetual care of
	the cemetery in general and for those plots that were purchased
	before the certificate was surrendered;
	(2)  require that the cemetery remove any signage or
	other announcement stating that the cemetery is a perpetual care
	cemetery;
	(3)  require each contract and other evidence of
	ownership entered into after the date of the order to clearly state
	that the cemetery is not regulated by the Texas Department of
	Banking and may not use the term "perpetual care cemetery"; and
	(4)  state the location of cemetery records and require
	the cemetery to:
	(A)  retain existing records regarding the
	perpetual care fund for five years after the date of the order; and
	(B)  continue to comply with all recordkeeping
	requirements of Chapter 711.
	(i)  Not later than the 10th day after the date an order
	approving the surrender of a certificate of authority is signed,
	the certificate holder shall deliver the original certificate of
	authority to the commissioner along with a written notice of
	surrender that includes the location of the certificate holder's
	records and the name, address, telephone number, and other contact
	information for an individual who is authorized to provide access
	to the records.
	(j)  The surrender of a certificate of authority does not
	reduce or eliminate a certificate holder's administrative, civil,
	or criminal liability arising from any acts or omissions that occur
	before the surrender of the certificate.
	SECTION 9.  Section 712.022, Health and Safety Code, is
	amended to read as follows:
	Sec. 712.022.  OPERATION OF PERPETUAL CARE CEMETERY. A
	corporation authorized by law to operate a perpetual care cemetery
	but not doing so may do so if the corporation:
	(1)  complies with the requirements of this chapter for
	obtaining a certificate of authority [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.
	SECTION 10.  Section 712.044(a), Health and Safety Code, is
	amended to read as follows:
	(a)  The commissioner may examine on a periodic basis[,
	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.
	SECTION 11.  Section 712.0441, Health and Safety Code, is
	amended by amending Subsection (f) and adding Subsection (f-1) to
	read as follows:
	(f)  The commissioner may issue an order requiring
	restitution by a person [corporation] to the cemetery's [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 Chapter 2001, Government Code [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.
	(f-1)  The commissioner may issue an order requiring
	restitution by a person if, after notice and opportunity for a
	hearing held in accordance with the procedures for a contested case
	hearing under Chapter 2001, Government Code, the commissioner finds
	that the corporation has not ordered memorials, as defined by
	Section 711.001(20-a), in compliance with the deadlines
	established by rules adopted under this chapter.
	SECTION 12.  Section 712.0442(a), Health and Safety Code, is
	amended to read as follows:
	(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
	may [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 corporation's certificate of authority
	[person's permit] under this chapter [Chapter 154, Finance Code,]
	if the person holds such a certificate [permit].
	SECTION 13.  Subchapter C, Chapter 712, Health and Safety
	Code, is amended by adding Sections 712.0443, 712.0444, and
	712.0445 to read as follows:
	Sec. 712.0443.  CEASE AND DESIST ORDER. (a) The
	commissioner may issue an order to cease and desist to a person if:
	(1)  the commissioner finds by examination or other
	credible evidence that the person has violated a law of this state
	relating to perpetual care cemeteries, including a violation of
	this chapter, the commissioner's final order, or a Finance
	Commission of Texas rule; and
	(2)  the violation was not corrected by the 31st day
	after the date the person receives written notice of the violation
	from the department.
	(b)  An order proposed under this section shall be served on
	the person and must state the grounds for the proposed order with
	reasonable certainty and the proposed effective date, which may not
	be less than the 20th day after the date the order is mailed or
	delivered. The order becomes effective on the proposed date unless
	the person requests a hearing not later than the 19th day after the
	date the order is mailed or delivered.  If the person requests a
	hearing, the hearing shall be conducted in accordance with the
	procedures for a contested case hearing under Chapter 2001,
	Government Code.
	Sec. 712.0444.  EMERGENCY ORDER. (a) The commissioner may
	issue an emergency order that takes effect immediately if the
	commissioner finds that immediate and irreparable harm is
	threatened to the public or a plot owner, marker purchaser, or other
	person whose interests are protected by this chapter.
	(b)  An emergency order remains in effect unless stayed by
	the commissioner.
	(c)  The person named in the emergency order may request in
	writing, not later than the 18th day after the date the order is
	mailed, a hearing to show that the emergency order should be stayed.
	On receipt of the request, the commissioner shall set a time for the
	hearing not later than the 21st day after the date the commissioner
	received the request, unless extended at the request of the person
	named in the order.
	(d)  The hearing is an administrative hearing relating to the
	validity of findings that support immediate effect of the order.
	Sec. 712.0445.  RECEIVERSHIP PROCEEDINGS. (a) In
	conjunction with a proceeding to forfeit the right to do business in
	this state brought by the attorney general, the attorney general
	may seek the appointment of a receiver. This remedy is in addition
	to other grounds for the appointment of a receiver.
	(b)  If the receiver is a private party, the receiver shall
	be compensated from the corporation or, if the corporation has no
	assets available to pay the receiver, from the income only of the
	perpetual care fund. The receiver may not invade the principal of
	the fund.
	(c)  The court may appoint a department employee as receiver.
	If the receiver is a department employee, the employee may not
	receive compensation for serving as receiver in addition to the
	employee's regular salary. The department may receive
	reimbursement from the corporation for the travel expenses and the
	fully allocated personnel costs associated with the employee's
	service as receiver.
	(d)  A department employee serving as receiver is not
	personally liable for damages arising from the employee's official
	act or omission unless the act or omission is corrupt or malicious.
	The attorney general shall defend an action brought against an
	employee serving as receiver because of an official act or omission
	as receiver regardless of whether the employee has terminated
	service with the department before the action commences.
	SECTION 14.  Section 712.048, Health and Safety Code, is
	amended by adding Subsection (c) to read as follows:
	(c)  A person commits an offense if the person collects money
	for the purchase of a memorial, as defined by Section 711.001, and
	knowingly defalcates or misappropriates the funds. An offense
	under this subsection is punishable as if it were an offense under
	Section 32.45, Penal Code. This subsection does not prevent an
	aggrieved party or the attorney general from maintaining a civil
	action for the recovery of damages, or the commissioner from
	maintaining an administrative action for restitution, caused by an
	injury resulting from an offense under this subsection.
	SECTION 15.  Sections 711.062, 712.0031, and 712.0441(e),
	Health and Safety Code, are repealed.
	SECTION 16.  A person who owns and operates a perpetual care
	cemetery on September 1, 2011, that on that date complies with
	Sections 712.003 and 712.0031, Health and Safety Code, as those
	sections existed before amendment or repeal by this Act, is
	automatically granted a certificate of authority. The certificate
	of authority expires March 1, 2012, unless the certificate holder
	renews the certificate in accordance with Section 712.0037, Health
	and Safety Code, as added by this Act.
	SECTION 17.  This Act takes effect September 1, 2011.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I certify that H.B. No. 2495 was passed by the House on April
	28, 2011, by the following vote:  Yeas 139, Nays 3, 1 present, not
	voting.
	______________________________
	Chief Clerk of the House
	I certify that H.B. No. 2495 was passed by the Senate on May
	17, 2011, by the following vote:  Yeas 31, Nays 0
	.
	______________________________
	Secretary of the Senate
	APPROVED:  _____________________
	Date
	_____________________
	Governor