Developed in 1998 by the Government and Legal Affairs Task Force of the International Cemetery and Funeral Association
Background
Cemetery authorities offering predeveloped interment spaces for sale to the public should provide assurances that the future development and completion of the contracted- for interment spaces will occur.
The sale of an interment space is generally considered a completed transaction when the right to use the land for interment is granted to the buyer. Accordingly, amounts paid for interment spaces, even those that are sold on a predeveloped basis, should not be subject to the same type of trusting requirements as merchandise and services.
The costs associated with developing land for burial purposes are significantly less than the costs that may be incurred to construct a mausoleum, columbarium, or below-ground crypts. The type of predeveloped interment space, whether a grave space or a mausoleum crypt, should be taken into consideration when determining mechanisms to guarantee completion.
Principles
Prior to the sale of a predeveloped grave space for ground burial, the cemetery authority should have available developed grave spaces that are comparable in value to the predeveloped grave spaces being sold until such time as development is completed.
Prior to the sale of a predeveloped mausoleum crypt, niche, or below-ground crypt, the cemetery authority should utilize one of the three following methods to ensure completion of the contracted-for interment spaces:
- Post a completion bond. The face value of the completion bond should be based on the total projected cost to develop the interment spaces; or
- Establish a separate predeveloped interment space trust fund funded from a portion of the proceeds from the sale of each predeveloped interment space, in an amount sufficient to cover the total projected cost to develop the interment spaces. The amounts due the predeveloped interment space trust fund should be desposited within a reasonable time after receipt. The cemetery authority should be entitled to withdraw from the predeveloped interment space trust fund amounts equivalent to the cost-of-labor performed and the mateials delivered by certifying such construction costs to the trustee. Once the predeveloped interment spaces have been fully constructed, the cemetery authority should certify completion to the trustee and be entitled to withdraw all funds, including income, from the predeveloped interment space trust fund; or
- Have a available comparable developed inventory for the total number of predeveloped interment spaces until such time as construction is completed
These requirements discussed above should not apply to interment spaces that are developed or constructed prior to being offered for sale.
The purchase agreement for a predeveloped interment space should contain an explanation of how the buyer’s interests will be protected by compliance with the predeveloped interment space law.
In addition to the buyer’s right of rescission under existing state and federal law, the purchase agreement for a predeveloped interment space should of explain whether and under what terms the purchase agreement may be cancelled after the initial right rescission period.
The purchase agreement should contain a specified time period to commence and complete construction from the date of the first sale of a predeveloped interment space.
Extension for commencing or completing construction of predeveloped interment spaces should be granted by the regulatory authority for circumstances beyond the control of the cemetery authority which cause a delay.
The purchase agreement should explain the buyer’s remedies if the predeveloped interment space is not completed within the allotted time period.
In the event that the predeveloped interment space is not completed prior to need and the buyer has made full payment, the purchase agreement should state that the cemetery authority will provide the buyer with a choice of:
- A replacement developed interment space, at least equal in value and location to the predeveloped interment space, to the extent available; or
- Temporary interment until such time as the contracted-for predeveloped interment space is completed, when the human remains would be disinterred and reinterred at no additional charge.
Sales of predeveloped interment spaces should be subject to regulatory authority oversight with a periodic filing requirement.
