Sec. 42-202. Escrow accounts.
Sec. 42-202. Escrow accounts. (a) A licensed funeral service establishment shall
deposit any money or securities which such establishment receives pursuant to a funeral
service contract, and not later than fifteen days after its receipt of such money or securities, in one or more escrow accounts established in accordance with the provisions of
this section. Not later than ten days after the initial deposit of such money or securities,
the escrow agent shall notify the purchaser, in writing, of the agent's receipt of such
initial deposit and the amount of such initial deposit. Such escrow agent shall notify the
purchaser of any transfer of such funds or securities, except when such transfer is to
pay for services as required by the funeral service contract. Such funds or securities
shall not be transferred to an insurance contract without a description to the purchaser
by the funeral director of any fees, costs or commissions associated with such insurance
contract and without obtaining the written consent of the purchaser to such transfer.
(b) Each escrow account established pursuant to this section shall be administered
and maintained by an escrow agent. The funeral service establishment which deposits
money or securities in such escrow account shall appoint such agent who shall be one
of the following: (1) A national banking association; (2) a state bank and trust company;
(3) a federal or state chartered savings bank; (4) a federal or state chartered savings and
loan association; (5) a licensed insurance company; or (6) a registered broker-dealer.
No such institution shall be appointed as an agent unless such institution is authorized
by law to act as an escrow agent.
(c) Assets held in escrow accounts established pursuant to this section shall be invested in one or more of the following: (1) Deposit accounts insured by the Federal
Deposit Insurance Corporation; (2) accounts insured against loss of principal by an
agency or instrumentality of the United States government; (3) bonds in which savings
banks in this state may, by law, invest; (4) bonds of the United States or any agency
thereof or of this state or any municipality of this state; (5) insurance contracts with an
insurance company licensed by the state of Connecticut to offer such contracts and
maintaining not less than a B plus rating for financial security by A.M. Best; or (6) any
other deposit account or security of a quality, safety and expense comparable to those
set forth in this subsection.
(d) All interest, dividends and other income earned on the amounts deposited in an
escrow account pursuant to this section shall be retained in such escrow account and
credited, less any administration expenses, to the respective interests of those persons
for whose benefit the escrow account is maintained. Amounts in an escrow account
shall be removed from such account only as provided in sections 42-200 to 42-206,
inclusive. Each party to a funeral service contract shall receive an annual statement of
the amount credited to such party's escrow account. Such statement shall include the
name and address of the escrow agent.
(e) If a purchaser of funeral services, property or merchandise defaults in making
payments required under the terms of such contract, or if the purchaser or the person
responsible for making funeral arrangements for a deceased beneficiary fails to have
the funeral service establishment provide services, the funeral service establishment
may retain any origination fee and any costs actually and reasonably incurred by such
establishment in the performance of the contract as liquidated damages, provided the
sum of the amount retained as an origination fee and the amount retained to pay for
costs incurred by the funeral establishment in the performance of the contract shall not
exceed an amount equal to five per cent of the amount in the escrow account at the time
the purchaser of funeral services defaults in making such payments. The balance of any
amount remaining in the escrow account shall be paid to such purchaser upon request.
(f) A person, firm or corporation licensed in accordance with the provisions of
chapter 385 which enters into a funeral service contract shall furnish the agent of an
escrow account established in accordance with the provisions of this section with the
name of the purchaser of such services, property or merchandise, the address and name
of the beneficiary of the funeral service contract and the amount contracted for, together
with a copy of the contract listing the services, personal property or merchandise to be
furnished by the funeral service establishment. Nothing in this section shall prohibit the
commingling within an escrow account of the money or securities received under more
than one funeral service contract for the purpose of management and investment of
funds in such escrow account.
(g) A funeral service contract shall provide that, if the particular merchandise provided for in the contract is not available at the time of death, the funeral service establishment shall furnish merchandise similar in style and at least equal in quality of material
and workmanship to the merchandise provided for in the contract.
(P.A. 85-376, S. 3; P.A. 90-46, S. 1; P.A. 91-357, S. 62, 78; P.A. 06-87, S. 2.)
History: P.A. 90-46 amended section to require that only one escrow agent be named to administer escrow accounts
established pursuant to funeral service contracts, where previously two were required; P.A. 91-357 deleted reference to
the Federal Savings and Loan Insurance Corporation from Subsec. (c); P.A. 06-87 amended Subsec. (a) to make technical
changes, require escrow agent to provide certain notification to purchaser and prohibit transfer of funds or securities to
insurance contract without description to purchaser of fees, costs or commissions and without obtaining purchaser's written
consent, made a technical change in Subsec. (b) and amended Subsec. (c) to add provision re investment of assets in
insurance companies as new Subdiv. (5), redesignating existing Subdiv. (5) as (6) and deleting "insurance contract" therein.