Michigan Laws 328.222 – Funds to be held in escrow by escrow agent; additional commission not subject to depository requirements; commission if contract price paid in installments; refund; qualifications and selection o
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Terms Used In Michigan Laws 328.222
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Cemetery: means 1, or a combination of more than 1, of the following:
(i) A burial ground for earth interments. See Michigan Laws 328.213Cemetery merchandise: means merchandise described in section 4(1)(k)(i). See Michigan Laws 328.213 Cemetery services: means cremations, grave openings and closings, and installation of grave memorials. See Michigan Laws 328.213 Contract: A legal written agreement that becomes binding when signed. Contract beneficiary: means an individual specified or implied in a prepaid contract for whom the funeral or cemetery services or merchandise shall be performed or furnished after death. See Michigan Laws 328.213 Contract buyer: means an individual, including a contract beneficiary, who purchases merchandise or funeral or cemetery services pursuant to a prepaid contract. See Michigan Laws 328.213 contract price: means money and other property to be paid as total compensation to a contract seller or provider for the funeral or cemetery services or merchandise, or both, to be performed or furnished under a prepaid contract, late payment penalties, payments required to be made to a governmental agency at the time the contract is entered into, and income earned on the funds. See Michigan Laws 328.213 Contract seller: means a person who sells, makes available, or provides prepaid contracts. See Michigan Laws 328.213 Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name. Depository: means a state or nationally chartered bank or state or federally chartered savings and loan association, savings bank, or credit union whose deposits are insured by an agency of the United States government under the laws of this state or the United States. See Michigan Laws 328.214 Detroit consumer price index: means the index for all urban wage earners for the Detroit statistical area from the United States department of labor, bureau of labor statistics. See Michigan Laws 328.214 Escrow: Money given to a third party to be held for payment until certain conditions are met. Escrow agent: means a person who holds, invests, and disburses principal and income from the funds received under a prepaid contract. See Michigan Laws 328.214 Funds: means all money or other consideration actually received from a contract buyer by a contract seller or provider or an assignee from the contract buyer in connection with any aspect of the sale of a prepaid contract, including finance charges, but does not include late payment penalties, payments required to be made to a governmental agency at the time the contract is entered into, or a commission authorized by section 12(1). See Michigan Laws 328.214 Funeral services: means services customarily performed by a mortuary science licensee who is licensed pursuant to article 18 of the occupational code, 1980 PA 299, MCL 339. See Michigan Laws 328.214 Guaranteed price contract: means a prepaid contract under which funds received are held pursuant to an escrow agreement. See Michigan Laws 328.214 in writing: shall be construed to include printing, engraving, and lithographing; except that if the written signature of a person is required by law, the signature shall be the proper handwriting of the person or, if the person is unable to write, the person's proper mark, which may be, unless otherwise expressly prohibited by law, a clear and classifiable fingerprint of the person made with ink or another substance. See Michigan Laws 8.3q Income: means the money earned by the investment of the principal, including, but not limited to, interest, dividends, and gains or losses on the sale of, deposit of, or exchange of, property using invested principal amounts. See Michigan Laws 328.214 merchandise: means both of the following:
(i) Cemetery burial vaults or other outside containers, grave memorials, and urns. See Michigan Laws 328.214Nonguaranteed price contract: means a prepaid contract under which funds received are held pursuant to an escrow agreement between a contract seller or provider and a contract buyer and are applied to the cost of the merchandise or funeral or cemetery services, which merchandise or funeral or cemetery services may be selected by the contract buyer at the time the contract is signed or as selected by a person legally authorized to procure merchandise or funeral or cemetery services at the time of death of the contract beneficiary. See Michigan Laws 328.215 Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period. Person: means an individual, group of individuals, sole proprietorship, partnership, limited liability company, association, corporation, government agency, cemetery, or a combination of these legal entities. See Michigan Laws 328.215 Prepaid contract: means a contract requiring payment in advance for funeral or cemetery services or merchandise, physical delivery and retention of which would occur after death under a guaranteed price contract or a nonguaranteed price contract. See Michigan Laws 328.215 Principal: means the money or other consideration actually deposited in the escrow or trust accounts required by this act. See Michigan Laws 328.215 Provider: means any person who furnishes or agrees to furnish merchandise or funeral or cemetery services pursuant to a prepaid contract, whether or not that person is the contract seller. See Michigan Laws 328.215 Remainder: An interest in property that takes effect in the future at a specified time or after the occurrence of some event, such as the death of a life tenant. state: when applied to the different parts of the United States, shall be construed to extend to and include the District of Columbia and the several territories belonging to the United States; and the words "United States" shall be construed to include the district and territories. See Michigan Laws 8.3o
(1) Except as otherwise provided in subsection (2), all funds received in connection with a prepaid contract shall be held in escrow by an escrow agent for the benefit of the contract beneficiary.
(2) Funds received by a cemetery registered under the cemetery regulation act, 1968 PA 251, MCL 456.521 to 456.543, for cemetery merchandise may, in lieu of subsection (1), be escrowed as follows:
(a) Before January 1, 2006, 60% of the funds received during that period from the sale of cemetery merchandise pursuant to prepaid contracts.
(b) After December 31, 2005 and before January 1, 2007, 65% of the funds received during that period from the sale of cemetery merchandise pursuant to prepaid contracts.
(c) After December 31, 2006 and before January 1, 2008, 70% of the funds received during that period from the sale of cemetery merchandise pursuant to prepaid contracts.
(d) After December 31, 2007 and before January 1, 2009, 75% of the funds received during that period from the sale of cemetery merchandise pursuant to prepaid contracts.
(e) After December 31, 2008, 80% of the funds received from the sale of cemetery merchandise pursuant to prepaid contracts.
(3) A prepaid contract may authorize the contract seller or provider to charge an additional commission of not more than 10% of the contract price which shall not be subject to the depository requirements of this section. If the contract price is paid in installments, the commission retained by the contract seller or the provider shall not exceed the rate of the commission charged in the prepaid contract for each installment. On cancellation, a contract buyer is entitled to a refund as provided in section 13(1) or (2).
(4) Only the following persons may serve as the escrow agent of funds under this section:
(a) If the prepaid contract is a nonguaranteed price contract, the contract seller or provider of that nonguaranteed price contract.
(b) If the prepaid contract is either a guaranteed or nonguaranteed price contract, a depository, a trust company, or a Michigan nonprofit corporation or association, in which the majority interest is held by 250 or more funeral establishments licensed under article 18 of the occupational code, 1980 PA 299, MCL 339.1801 to 339.1812, or a Michigan nonprofit corporation or association, in which the majority interest is held by 30 or more cemeteries registered and operated pursuant to the cemetery regulation act, 1968 PA 251, MCL 456.521 to 456.543. If the prepaid contract is a guaranteed price contract, the contract seller or the provider shall not serve as the escrow agent.
(5) If the escrow agent is not the contract seller or provider of a nonguaranteed price contract, the escrow agent shall be selected as follows:
(a) If the prepaid contract is a nonguaranteed price contract, the escrow agent may be selected by either the contract seller or the provider.
(b) If the prepaid contract is a guaranteed price contract, the escrow agent shall be selected by the provider who has been designated to furnish the funeral services. If the prepaid contract does not include funeral services, the escrow agent shall be selected by any provider.
(6) If the escrow agent is a person other than the person to whom the funds have been paid by the contract buyer, the funds shall be deposited with the escrow agent within 30 days after the receipt by the person to whom the funds are paid.
(7) Funds held by an escrow agent shall be held and invested only as specified in the prepaid contract. A prepaid contract may authorize investments only as follows:
(a) If the prepaid contract is a nonguaranteed price contract, the funds shall be invested in 1 or more interest-bearing accounts in a depository.
(b) If the prepaid contract is a guaranteed price contract, the principal and income may be invested only in accordance with section 7803 of the estates and protected individuals code, 1998 PA 386, MCL 700.7803, except that funds shall not be invested in a company owned by, operated by, or affiliated in any way with a contract seller or provider or an authorized agent of a contract seller or provider or in loans to any person directly connected with or employed by a contract seller or provider or an authorized agent of a contract seller or provider.
(8) Income shall be held and invested by the escrow agent in the same manner as the principal except that the income may be utilized to pay reasonable fees and expenses of the escrow agent in addition to other costs specifically authorized by this act. The expenses and fees paid to the escrow agent shall not exceed 1% of the aggregate balance of principal and prior earned income from each account annually. If a fee is charged for reasonable expenses for the administration costs under an escrow agreement, the amount may be paid to the escrow agent periodically or may be accumulated in the account and paid at the time of death or upon cancellation of the contract. A cemetery that has elected the escrowing option for cemetery merchandise provided in subsection (2) may provide by written agreement with the escrow agent to be paid accumulated income generated solely by the investment of funds received for the cemetery merchandise. Such payments to a cemetery may not be made more frequently than once in a 12-month period and shall not exceed the net amount of income earned in the previous 12 months less any amounts paid to the escrow agent for expenses and fees described in this subsection and an amount equal to any increase in the Detroit consumer price index.
(9) Amounts of principal and income held by an escrow agent other than the contract seller or provider of a nonguaranteed price contract may be commingled with principal and income derived from other prepaid accounts. However, a separate accounting of principal and income shall be maintained for each prepaid contract under the name of the contract beneficiary.
(10) The escrow agent shall send to the contract buyer a notice stating the date, amount of the deposit, and the name of the escrow agent with whom the funds are deposited.
(11) Upon the death of the contract beneficiary and upon performance by the provider of its obligation to furnish merchandise or funeral or cemetery services pursuant to the prepaid contract, funds held by the escrow agent shall be disbursed as follows:
(a) If the prepaid contract is a nonguaranteed price contract, the principal and income shall first be disbursed by the escrow agent to the provider of the merchandise or funeral or cemetery services in payment of all reasonable charges. Thereafter, not less than 90% of the remaining balance of principal and income, if any, shall be disbursed to the person, other than the provider or the contract seller, designated in the prepaid contract or authorized by law to receive the surplus, and the remainder, if any, shall be disbursed to the provider as final compensation for its services. The amount paid to the person entitled to receive the surplus shall be as follows:
(i) If no commission has been charged pursuant to this section, at least 90% of the remaining balance of principal and income in the escrow account.
(ii) If a commission of 5% or less of the contract price has been charged, at least 95% of the remaining principal and income in the escrow account.
(iii) If a commission of greater than 5% of the contract price has been charged, 100% of the remaining principal and income in the escrow account.
(b) If the prepaid contract is a guaranteed price contract, the principal and income held by the escrow agent shall be disbursed to the provider, its designee, or its successor.
(c) If the escrow agent is notified that there is a dispute as to whether the provider has performed all its obligations under the prepaid contract, the escrow agent shall file an action for interpleader or shall obtain an impartial arbitrator to determine the rights of the parties. Expenses of arbitration shall be shared equally by the parties unless otherwise ordered by the arbitrator.
(12) A Michigan nonprofit corporation or association, in which the majority interest is held by 250 or more funeral establishments or by 30 or more cemeteries registered and operated under the cemetery regulation act, 1968 PA 251, MCL 456.521 to 456.543, may be designated as the escrow agent under this section only if the contract buyer has expressly authorized that designation in writing. If the contract buyer authorizes the appointment as escrow agent of a Michigan nonprofit corporation or association in the prepaid contract, the authorization shall be set forth in a separate paragraph which shall not be effective unless separately signed or initialed by a contract buyer and which shall state that the contract buyer may elect to require that a depository or a trust company be designated as the escrow agent.
(13) If a prepaid contract is canceled, the escrow agent shall disburse the principal and income in accordance with section 13.
(14) At least annually, unless waived in writing by a contract buyer, a contract buyer shall be furnished a statement indicating the current balance, the fees or expenses charged since the last statement, the amount of the refund to which a buyer is entitled if the contract is canceled, and the name and address of the escrow agent from whom additional information may be obtained about the account. The cost of the statement required by this subsection may be paid from the income and may be in addition to any other fee or charge authorized by this act.