Michigan Laws 328.223 – Cancellation of prepaid contract by contract buyer; notice; disbursement of principal and income; cancellation of contract by contract seller or provider; failure to use escrow account to make fu
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(1) A contract buyer may cancel a prepaid contract at any time before the death of the contract beneficiary upon 30 days’ prior written notice to the contract seller of a nonguaranteed price contract or to the provider designated to furnish merchandise or funeral or cemetery services pursuant to a guaranteed price contract. The contract seller or provider shall promptly notify the escrow agent of the cancellation and of its effective date, if the escrow agent is other than the contract seller or the provider. After receipt of the notice of cancellation, except as otherwise provided in subsection (2), the escrow agent shall disburse not less than 90% of the principal and income in the escrow account to the contract buyer pursuant to this subsection and shall disburse the remainder of the principal and income, if any, to the contract seller or the provider. The refund to the contract buyer shall be determined as follows:
(a) If no commission has been charged pursuant to section 12(1), at least 90% of the remaining balance of principal and income in the escrow account or held by the trustee.
Terms Used In Michigan Laws 328.223
- 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 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 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. Trustee: A person or institution holding and administering property in trust.
(b) 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.
(c) 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.
(2) In the case of funds received for cemetery merchandise by a cemetery that has elected the escrowing option in section 12(2), the escrow agent shall disburse the principal and income in the account to the cemetery and the cemetery shall disburse to the contract buyer 100% of the amount of the contract price paid by the contract buyer plus an amount equal to any increase in the Detroit consumer price index since the contract was executed.
(3) A contract seller of a nonguaranteed price contract or a provider designated to furnish merchandise or funeral or cemetery services pursuant to a guaranteed price contract may cancel a prepaid contract only if the contract buyer of a guaranteed price contract is more than 90 days delinquent in making any installment payment or partial payment, or the contract buyer is otherwise in default as to any other obligation under the contract. Upon cancellation, the contract buyer shall receive a refund as determined pursuant to subsection (1).
(4) After the death of the contract beneficiary, the contract buyer or the contract buyer’s estate may cancel the prepaid contract only where there are no remains of the deceased; where the remains of the deceased cannot be recovered; or where a prepaid contract was not utilized due to lack of knowledge by the person or persons entitled to make funeral arrangements of the existence of the prepaid contract. After such a cancellation, the contract buyer or the contract buyer’s estate shall receive a refund in accordance with subsection (1) or (2) within 30 days after receipt by the contract seller or the provider of a request for payment from the contract buyer or the contract buyer’s estate. Contracts may be upgraded after the death of the contract beneficiary by a person on behalf of the contract beneficiary’s estate or by a person entitled to make funeral or cemetery arrangements. This subsection does not prevent the transfer of a contract from 1 provider to another provider upon the request of those entitled to make funeral arrangements.
(5) Prior to the death of the contract beneficiary and in the case of a prepaid contract or multiple prepaid contracts containing any of the merchandise or services escrowed under section 12(1) together with cemetery merchandise escrowed under section 12(2), the buyer may cancel that portion of the contract pertaining to the cemetery merchandise alone, without canceling the remaining portions. Such cancellation is subject to refund pursuant to section 13(2).
(6) A contract seller or a provider that assigns or transfers its obligations under a prepaid contract to another provider shall notify the contract buyer of the assignment in writing. If the contract buyer cancels the contract within 30 days of the notification of the assignment, the buyer shall be entitled to a refund of 100% of the remaining principal and income plus the commission, if any, charged in accordance with section 12(1) or (2). An assignment or transfer of a provider’s obligations under a prepaid contract that is made in connection with the sale of a business is subject to this subsection only if more than 50% of the ownership interest in the business is transferred to another person or persons within a 12-month period. Upon sale of the business, the notice requirement of this subsection is the responsibility of the purchaser. This subsection does not apply to an assignment of a financial interest in an installment contract to a financial institution. At the time that the contract seller or provider receives payment in exchange for selling or assigning its financial interest in an installment contract to a financial institution, the contract seller or provider shall be required to place in escrow the amount required by this act. This subsection does not apply to burial rights or other land interests, crypts, inscribed grave memorials, or niches, for which no refunds are available.