North Carolina Pre-Need Funeral Bond

North CarolinaSB 18 is a new law that was introduced in 2009 affecting North Carolina cemeteries; the law repealed the pre-need funeral surety bond. This law originated from the insolvencies of two cemeteries. The surety company was prepared to pay the claims of the individuals whose contracts were not fulfilled, but the quality of the cemeteries’ records did not suffice. The Cemetery Commission also understood that the surety bond was a forfeiture bond and that the surety had to submit the whole penal sum of the bond to the state regulators, who would then pay the claims. The court concluded that the surety on the bond had no legal responsibility. The cemetery had altered its ownership and corporate name while the name of the cemetery on the surety bond was never modified.

While SB 18 initially repealed the bond requirement, the law was amended in the Senate to grandfather operating cemeteries that had surety bonds, but asked new licensees to set up a trust fund. The SFAA and AIA addressed this law last year so that when it passed the Senate, the provision to revoke the bond had been canceled. SB 18 was heard and a consumer group was fruitless in modifying the law so that the surety would have to certify yearly that it would take responsibility for claims as they occurred. The new law was enacted without any surety bond repeal.