§5–701. §5

Business Regulation Article, Title 5 – Office of Cemetery Oversight Annotated Code of Maryland

(Revised copy 10/2018)

§5–701.

(a) In this subtitle the following words have the

meanings indicated.

(b) (1) “Burial space” means land or space in a

structure used or to be used for burial.

(2) “Burial space” includes a burial right in the

land or space.

goods or preneed services.

(d) “Preneed burial contract” means a written

instrument under which preneed goods or preneed

services are to be sold and delivered or performed.

(e) (1) “Preneed services” means services that are

sold:

(i) before the buyer’s death; and

(ii) in connection with burial or cremation.

(2) “Preneed services” includes opening and

closing a grave.

(f) “Seller” means a registered cemeterian,

registered crematory operator, registered seller, or any

other person who sells preneed goods or preneed

services.

(g) “Specific funds” means money that is identified

to a specific preneed burial contract.

(h) “Trust account” means a preneed trust account.

§5–702.

(a) This subtitle does not apply to:

(1) the sale of burial space;

(2) a preneed contract made by an individual in

connection with practicing funeral direction or practicing

mortuary science, as those practices are defined in and

regulated by the Health Occupations Article; or

(3) the preneed sale of burial goods or services by

a private family cemetery that does not conduct public

sales of burial goods or services.

(b) This subtitle does not allow a person, directly or

indirectly, through an agent or otherwise, to practice

funeral direction or practice mortuary science, unless the

person is licensed to practice funeral direction or

practice mortuary science under the Health Occupations

Article.

subtitle is not an insurance contract and does not involve

the business of insurance.

(d) This subtitle does not require a cemetery to

accept goods, perform services, or allow services to be

performed if the goods or services are contrary to:

(1) the law concerning burial; or

(2) the rules of the cemetery concerning the

quality and kind of goods or services that may be used in

connection with burial in the cemetery.

(e) (1) A preneed burial contract made in

accordance with § 5-704 of this subtitle may be funded

by a life insurance policy or an annuity contract if:

(i) the owner or operator of the cemetery is not

the owner of or beneficiary under the life insurance

policy or annuity contract;

(ii) an assignment of benefits to the owner or

operator of the cemetery may be revoked at any time by

the owner of the life insurance policy or annuity

contract;

(iii) subject to item (iv) of this paragraph, the

owner or operator of the cemetery agrees to accept the

benefits payable under the life insurance policy or

annuity contract as payment in full for the services and

merchandise agreed on in the preneed burial contract;

and

(iv) any benefits payable under the life

insurance policy or annuity contract in excess of the

amount necessary to pay the total price, as determined at

the time of death of the insured, of the services and

merchandise agreed on in the preneed burial contract are

paid to the beneficiary under the life insurance policy or

annuity contract.

(2) A preneed burial contract that is funded by a

life insurance policy or an annuity contract shall

terminate if the assignment of benefits to the owner or

operator of a cemetery is revoked by the owner of the

life insurance policy or annuity contract.

(3) (i) The offer, sale, or assignment of a life

insurance policy or annuity contract to fund a preneed

burial contract is not subject to this subtitle.

(ii) A preneed burial contract funded by a life

insurance policy or an annuity contract is not subject to §

5-705, § 5-706, § 5-707, § 5-708, or § 5-709 of this

subtitle.

Business Regulation Article, Title 5 – Office of Cemetery Oversight Annotated Code of Maryland

(Revised copy 10/2018)

§5–703.

This subtitle applies only to preneed burial contracts

made on or after October 1, 1984.

§5–704.

(a) A preneed burial contract shall contain:

(1) the name of the buyer;

(2) the name of the seller;

(3) the name of each individual, other than the

buyer, as to whom the preneed goods or preneed services

are to be furnished;

(4) a description of the preneed goods or preneed

services; and

(5) the amount of the buyer’s financial obligation.

(b) (1) A preneed burial contract shall be dated

and executed in duplicate by the buyer and seller.

(2) The seller shall give the buyer a duplicate

original of the preneed burial contract.

delivery of identified preneed goods by providing for the

seller to:

(i) transfer physical possession of the preneed

goods to the buyer or designee of the buyer;

(ii) attach the preneed goods to a designated

burial space;

(iii) pay for and suitably store the preneed

goods until needed, at a cemetery or other location of the

seller, if the preneed goods are marked with the name of

the buyer and the sale is supported by a verifiable

record; or

(iv) have the supplier of the preneed goods:

1. cause title to be transferred to the buyer or

designee of the buyer; and

2. agree in writing to ship the preneed goods

at the direction of the buyer or designee of the buyer.

(2) If a preneed burial contract does not provide

for the manner of delivery of preneed goods, compliance

with paragraph (1)(i) or (ii) of this subsection is delivery

in accordance with this subtitle.

(d) Notwithstanding any provision in a preneed

burial contract, identified preneed services are not

considered to have been performed until performance

actually occurs.

(e) (1) Except as otherwise provided in this

subsection, a preneed burial contract may not provide for

interest or a finance charge.

(2) A cemetery that makes a preneed burial

contract may impose interest or a finance charge on

preneed goods delivered before death or preneed

services performed before death.

(3) If a cemetery imposes interest or a finance

charge as permitted in paragraph (2) of this subsection,

the interest or finance charge shall be at a fixed rate or

sum not greater than allowed by the provisions of Title

12 of the Commercial Law Article.

(4) A registered cemeterian or permit holder may

sell a preneed burial contract to a commercial lending

institution at the financing terms in the contract if the

preneed burial contract signed by the original buyer of

the preneed goods or preneed services contains the

following language in 12-point or larger type:

“Notice to consumers: This contract of sale may be

sold to a commercial lending institution. After the sale,

the commercial lending institution may impose interest

or a finance charge on the remaining balance due”.

(f) A provision of a preneed burial contract that

purports to waive any provision of this subtitle is void.

§5–705.

(a) (1) Except as provided in subsection (b) of this

section, a seller shall put in trust the second 50% of the

total preneed burial contract price as the seller receives

payments from the buyer.

(2) Within 30 days after receipt of the last

payment, the seller shall deposit an additional amount to

make the balance in the trust account equal to 55% of the

total contract price.

(b) A seller shall put in trust an amount from the

payment that is equal to 80% of the selling price of any

casket or casket vault sold under the preneed burial

contract.

(1) a preneed burial contract under which all

preneed goods and preneed services, other than dates,

scrolls, and other additions that represent not more than

Business Regulation Article, Title 5 – Office of Cemetery Oversight Annotated Code of Maryland

(Revised copy 10/2018)

10% of the total contract price, must be delivered or

performed within 120 days after receipt of 50% of the

total contract price; or

(2) money that a seller receives for preneed goods

or preneed services to be delivered or performed within

120 days after receipt of any payment on account of the

sale, if the buyer’s obligation for these preneed goods or

preneed services is separately itemized.

§5–706.

(a) Each trust account shall be:

(1) titled “preneed trust account”; and

(2) established by the seller in the seller’s name.

(b) A trustee appointed under this subtitle must be:

(1) a national banking association, as defined in

the Financial Institutions Article;

(2) a banking institution, as defined in the

Financial Institutions Article;

(3) any other financial institution allowed by law

to engage in the trust business; or

(4) a person who provides a fidelity bond from a

recognized bonding institution in an amount equal to the

trust fund and inuring to the benefit of the trust account

of the cemetery or burial goods business, or the preneed

buyers, or both.

(1) commingle money from 2 or more preneed

burial contracts; and

(2) establish more than 1 trust account.

(d) (1) A trust account established under this

subtitle shall be a single purpose trust.

(2) Money in the trust account is not available to

a creditor as an asset of the seller.

(e) Money in the trust account may be withdrawn

only on the combined signatures of:

(1) 2 officers of a corporate seller; or

(2) at least 2 individuals authorized to withdraw

money for an unincorporated seller.

§5–707.

(a) In this section, “seller’s account” means:

(1) the total of specific funds deposited from all

preneed burial contracts of a seller commingled in a

single fund; and

(2) any income derived from investing the money

in the fund.

(b) Trust accounts shall be administered as this

subtitle provides.

subtitle, a trustee appointed under this subtitle is subject

to the law that is generally applicable to trustees.

(2) If a trustee appointed under this subtitle is not

located in the State, the agreement between the seller

and the trustee expressly shall incorporate this subtitle.

(d) A trustee:

(1) may rely on all certifications made under or

required by this subtitle; and

(2) is not liable to any person for that reliance.

(e) (1) Except as otherwise provided in this

subtitle, a trustee may invest money of a trust account in

any security that is a lawful investment for a fiduciary,

including a time deposit or certificate of deposit issued

by the trustee.

(2) Except as otherwise provided in this subtitle,

to ensure that money in the trust account is adequate, the

trust income, including any realized capital gains, shall:

(i) remain in the trust account;

(ii) be reinvested and compounded; and

(iii) be disbursed only for payment of

appropriate trustee’s fees, commissions, prorated

proportional shares of total realized capital gains

attributable to specific funds, and other costs of the trust

account.

(f) A trustee may not use any preneed trust funds

required to be held in trust in accordance with this

subtitle to:

(1) purchase an interest in any contract or

agreement to which the registrant, the permit holder, or

any other person subject to the trust requirements of this

subtitle, or any entity owned or under the control of a

Business Regulation Article, Title 5 – Office of Cemetery Oversight Annotated Code of Maryland

(Revised copy 10/2018)

registrant, a permit holder, or any other person subject to

the trust requirements of this subtitle, or a spouse, child,

parent, or sibling of a registrant or any other person

subject to the trust requirements of this subtitle is a

party; or

(2) make any loan or direct or indirect investment

of any kind:

(i) to any registrant, permit holder, or any other

person subject to the trust requirements of this subtitle or

to any spouse, child, parent, or sibling of a registrant or

any other person subject to the trust requirements of this

subtitle;

(ii) to or in any entity or business operations

owned or under the control of a registrant, a permit

holder, or any other person subject to the trust

requirements of this subtitle, or a spouse, child, parent,

or sibling of a registrant or any other person subject to

the trust requirements of this subtitle;

(iii) on or in any real property of a cemetery or

a crematory or the buildings or structures appurtenant to

the property; or

(iv) in any permanent improvements of a

cemetery, a crematory, the facilities of a cemetery or

crematory, or the buildings or structures appurtenant to a

cemetery or crematory.

(g) (1) A seller, on written notice to the trustee and

in accordance with the agreement between them, may

transfer the seller’s account to another trustee.

(2) A trustee, on written notice to the seller and in

accordance with the agreement between them, may

transfer the seller’s account to another trustee.

§5–708.

(a) The trustee may not disburse specific funds until

preneed goods are delivered or preneed services are

performed as provided in the preneed burial contract or

in this subtitle.

(b) On performance of a preneed burial contract:

(1) the seller shall certify to the trustee:

(i) delivery of the preneed goods or

performance of the preneed services; and

(ii) the amount of specific funds in the trust

account; and

(2) the trustee shall then pay to the seller the

specific funds, accrued interest on the specific funds, and

a prorated proportional share of total realized capital

gains attributable to the specific funds.

preneed goods or preneed services to which the trust

requirements of this subtitle apply and the consideration

paid or to be paid for each item.

(2) If a seller itemizes in accordance with

paragraph (1) of this subsection, on performance of that

part of a preneed burial contract identified for itemized

preneed goods or preneed services:

(i) the seller shall certify to the trustee:

1. delivery of the preneed goods or

performance of the preneed services; and

2. the amount of the specific funds identified

in the seller’s records for those preneed goods or preneed

services; and

(ii) the trustee shall then pay to the seller those

specific funds, accrued interest on the specific funds, and

a prorated proportional share of total realized capital

gains attributable to the specific funds.

(d) (1) If a preneed burial contract provides, for 2

or more individuals, preneed goods or preneed services

to which the trust requirements of this subtitle apply, a

seller may designate in the seller’s records the

consideration paid for each individual.

(2) On performance of that part of the preneed

burial contract identified to a particular individual:

(i) the seller shall certify to the trustee:

1. delivery of the preneed goods or

performance of the preneed services; and

2. the amount of the specific funds

applicable to that part of the preneed burial contract; and

(ii) the trustee shall then pay to the seller those

specific funds, accrued interest on the specific funds, and

a prorated proportional share of total realized capital

gains attributable to the specific funds.

Business Regulation Article, Title 5 – Office of Cemetery Oversight Annotated Code of Maryland

(Revised copy 10/2018)

§5–709.

(a) (1) A buyer may cancel a preneed burial

contract as to preneed goods not delivered or preneed

services not performed if the buyer:

(i) permanently moves more than 75 miles

from the cemetery specified in the preneed burial

contract; and

(ii) gives to the seller written notice, under

oath, of the move and includes the buyer’s new

permanent address.

(2) In that event:

(i) the seller shall certify to the trustee:

1. the cancellation of the preneed burial

contract;

2. the amount of the remaining specific

funds applicable to the preneed burial contract; and

3. the name and address of the buyer; and

(ii) the trustee shall then pay to the buyer the

remaining specific funds, accrued interest on the specific

funds, and a prorated proportional share of total realized

capital gains attributable to the specific funds.

(b) (1) Notwithstanding subsection (a) of this

section, by written notice, a buyer may cancel the

purchase of a casket or casket vault under a preneed

burial contract at any time prior to the time the buyer

needs the casket or casket vault for burial.

(2) In that event:

(i) the seller shall certify to the trustee:

1. the cancellation of the purchase of the

casket or casket vault under the preneed burial contract;

2. the amount of the specific funds

applicable to the casket or casket vault under the preneed

burial contract; and

3. the name and address of the buyer;

(ii) the trustee shall pay to the buyer the

specific funds, interest accrued on the specific funds, and

a prorated proportional share of total realized capital

gains attributable to the specific funds; and

(iii) in addition to the refund paid by the

trustee, the seller shall pay to the buyer an amount of

money necessary to provide the buyer with a refund of

100% of the money paid for the casket or casket vault

under the preneed burial contract.

cancellation and defaults on a preneed burial contract

and, as a result, the seller terminates the preneed burial

contract:

(1) the seller shall certify to the trustee:

(i) the default and termination of the preneed

burial contract;

(ii) the amount of the specific funds; and

(iii) the reasonable expenses of the seller; and

(2) the trustee shall then pay:

(i) to the buyer, those specific funds, accrued

interest on the specific funds, and a prorated

proportional share of total realized capital gains

attributable to the specific funds, less the reasonable

expenses of the seller; and

(ii) to the seller, the reasonable expenses of the

seller.

(d) If specific funds on deposit in a trust account

have been dormant for at least 50 years since the date of

the last deposit or disbursement and the seller cannot

locate the buyer:

(1) the seller shall certify to the trustee:

(i) that the trust account is dormant and the

buyer cannot be located; and

(ii) the amount of the specific funds; and

(2) the trustee shall then pay to the seller those

specific funds, accrued interest on the specific funds, and

a prorated proportional share of total realized capital

gains attributable to the specific funds.

§5–710.

(a) (1) Each seller shall keep detailed records of all

preneed burial contracts and specific funds.

(2) The records of each seller and of each trustee

appointed by the seller are subject to examination by:

(i) the Director;

(ii) the Attorney General or an authorized

representative of the Attorney General; and

Business Regulation Article, Title 5 – Office of Cemetery Oversight Annotated Code of Maryland

(Revised copy 10/2018)

(iii) the State’s Attorney for the county where

the seller does business.

(b) (1) Each seller subject to the trust requirements

of this subtitle shall submit a report to the Director

within 150 days after the close of each calendar or other

fiscal year chosen by the seller.

(2) The report shall:

(i) be on the form that the Director requires;

(ii) be certified by a certified public accountant

retained by the seller;

(iii) be accompanied by a trustee’s annual

summary statement of assets from the trustee for the

reporting period which includes:

1. the amount of money in the preneed trust

fund at the beginning of the reporting period;

2. an investment portfolio summary

describing the asset and the market value for each

investment class;

3. a transaction summary of the preneed trust

fund containing:

A. trust account earnings;

B. money deposited;

C. total receipts;

D. administrative expenses;

E. withdrawals from the trust account for

canceled contracts;

F. withdrawals from the trust account for

delivery of merchandise for use or storage, and for

services performed, including the principal and earnings;

G. other disbursements; and

H. total disbursements; and

4. the amount of money in the preneed trust

fund at the end of the reporting period;

(iv) be accompanied by a fee of $25; and

(v) include:

1. the name of the seller;

2. each location of the seller;

3. the amount of money that the seller

received during that year that is subject to the trust

requirements of this subtitle;

4. the amount of money actually deposited

into trust accounts in that year;

5. the amount of money required to be

disbursed from the trust accounts in that year;

6. the amount of money actually disbursed

from the trust accounts in that year; and

7. the name and address of the trustee.

(3) If the Director determines, after a review of

the report and annual summary statement of assets

required by this subsection, that additional

documentation is required, a seller subject to the trust

requirements of this subtitle shall provide the additional

documentation to the Director.

(4) (i) A seller of preneed goods or preneed

services that sells its business, files a petition in

bankruptcy, or ceases to operate shall provide written

notice within 15 days:

1. to the Director, detailing the changes and

the arrangements the seller has made for carrying out the

preneed burial contracts and the disbursement of any

money held in an escrow or trust account; and

2. to each buyer of a preneed burial contract,

advising the buyer of the buyer’s options under State law

in regard to the preneed contract.

(ii) Nothing in this paragraph exempts a seller

of preneed goods or services that sells its business, files

a petition in bankruptcy, or ceases to operate from filing

the annual report required under this section.

provide each buyer or prospective buyer with a general

price list for the buyer or prospective buyer to keep

which shall include:

(1) specific prices for:

(i) ground opening and closing;

(ii) extra depth interment;

(iii) interment of cremated remains; and

(iv) mausoleum entombment; and

(2) general price ranges for burial space or

preneed goods.

(d) A seller of a preneed burial contract shall

disclose to the buyer:

(1) all goods and services that are reasonably

expected to be required at the time of need that are not

included in the preneed burial contract;

Business Regulation Article, Title 5 – Office of Cemetery Oversight Annotated Code of Maryland

(Revised copy 10/2018)

(2) the buyer’s cancellation and refund rights

under § 5–709 of this subtitle;

(3) the person responsible for installation of the

goods sold and any warranties for the goods sold; and

(4) if the preneed contract provides for goods or

services to be delivered or performed before death:

(i) that interest or finance charges may be

imposed;

(ii) that interest or finance charges are not

allowed on other preneed burial contracts that do not

provide for goods or services to be delivered or

performed before death;

(iii) the manner of delivery of goods including

where the goods are stored; and

(iv) the buyer’s remedy if delivered goods are

damaged or destroyed.

(e) The Director may require a seller to correct any

underfunding, including interest, due to the preneed trust

account.

(f) The Director may adopt regulations:

(1) to administer this section; and

(2) for determining whether sellers are complying

with this subtitle.

§5–711.

(a) If the Director finds that a seller has violated this

subtitle or a regulation adopted under this subtitle, the

Director may refer the matter to:

(1) the Attorney General for civil enforcement; or

(2) the appropriate State’s Attorney for criminal

prosecution.

(b) The Attorney General may sue for and a court

may grant:

(1) injunctive or other equitable relief;

(2) imposition of a civil penalty not exceeding

$5,000; or

(3) both.

§5–712.

(a) A seller may not fail to deposit, as required by

this subtitle, money received under or in connection with

a preneed burial contract.

(b) (1) Except as otherwise provided in subsection

guilty of a misdemeanor and, on conviction, is subject

to:

(i) for a first violation, a fine not exceeding

$10,000 or imprisonment not exceeding 1 year or both;

(ii) for a second violation, a fine not exceeding

$15,000 or imprisonment not exceeding 2 years or both;

and

(iii) for a third or subsequent violation, a fine

not exceeding $20,000 or imprisonment not exceeding 3

years or both.

(2) Except as otherwise provided in subsection (c)

of this section, if a corporation violates this section, each

officer responsible for the violation is guilty of a

misdemeanor and, on conviction, is subject to:

(i) for a first violation, a fine not exceeding

$10,000 or imprisonment not exceeding 1 year or both;

(ii) for a second violation, a fine not exceeding

$15,000 or imprisonment not exceeding 2 years or both;

and

(iii) for a third or subsequent violation, a fine

not exceeding $20,000 or imprisonment not exceeding 3

years or both.

intentionally and fraudulently converts preneed trust

funds in excess of $100 to that person’s own use is

guilty of a felony and, on conviction, is subject to a fine

not exceeding $25,000 or imprisonment not exceeding

10 years or both.