Section 12-301 - Consideration; obligations; penalties upon failure to make contribution.
§ 12-301. Consideration; obligations; penalties upon failure to make contribution.
(a) Consideration.-
(1) A person may become a beneficial owner of a statutory trust and may receive a beneficial interest in a statutory trust without payment of consideration to the statutory trust.
(2) The consideration for a beneficial interest in a statutory trust may consist of:
(i) Money;
(ii) Tangible or intangible property;
(iii) Labor or services actually performed for the statutory trust;
(iv) A promissory note or other obligation for future payment of money;
(v) The transfer of tangible or intangible property;
(vi) A contract for future performance of labor or services; or
(vii) Any combination of the consideration described in items (i) through (vi) of this paragraph.
(b) Obligations.- Except as provided in the governing instrument of a statutory trust or by agreement between the beneficial owner and the statutory trust:
(1) A beneficial owner is obligated to the statutory trust to perform any promise to contribute cash or property or to perform services, even if the beneficial owner is unable to perform because of death, disability, or any other reason;
(2) Subject to the provisions of item (3) of this subsection, if a beneficial owner does not make the required contribution of property or services, the beneficial owner is obligated to the statutory trust to contribute cash equal to that portion of the agreed value, as stated in the records of the statutory trust, of the contribution that has not been made; and
(3) The obligation provided in item (2) of this subsection shall be in addition to, and not in lieu of, any other rights, including the right to specific performance, that the statutory trust may have against the beneficial owner under the governing instrument or applicable law.
(c) Penalties.-
(1) A governing instrument may provide that the interest of any beneficial owner who fails to make any contribution that the beneficial owner is obligated to make shall be subject to specific penalties for, or specified consequences of, the failure.
(2) The penalty or consequence may take the form of:
(i) Reducing or eliminating the defaulting beneficial owner's proportionate interest in the statutory trust, subordinating the beneficial owner's interest to that of nondefaulting beneficial owners;
(ii) A forced sale of the beneficial owner's interest;
(iii) A forfeiture or cancellation of the beneficial owner's interest;
(iv) A lending by other beneficial owners of the amount necessary to meet the defaulting beneficial owner's commitment;
(v) A fixing of the value of the defaulting beneficial owner's interest by appraisal or by formula, and a redemption or sale of the defaulting beneficial owner's interest at that value; or
(vi) Any other penalty or consequence.
[1999, ch. 452; 2010, ch. 611, § 1.]