Q. May cemeteries require consumers to purchase vaults and monuments exclusively from the cemetery?
A. As funeral directors readily understand, the FTC Funeral Rule prohibits funeral homes from compelling a consumer to purchase items, such as caskets and vaults, exclusively from the funeral home. However, very few cemeteries are covered by the Funeral Rule. Nevertheless, court cases have recognized that cemeteries may not monopolize markets by requiring consumers to purchase vaults and monuments exclusively from the cemetery. Therefore, cemeteries must allow consumers to utilize third party merchandise just as funeral homes do.
Q. May cemeteries charge more to install a vault that a funeral home sells than it charges to install a vault which it sells?
A. Section 1721.20 of the Ohio Revised Code prohibits a cemetery from making any charge pertaining to the delivery or installation of an outer burial container, except when the charge is for services actually performed by the cemetery in the installation. In other words, there would not be any justification for a cemetery charging more to install a vault the consumer purchased elsewhere than a vault the consumer purchased from the cemetery. The higher charge to install a third party vault would be illegal.
Q. May a cemetery require a consumer to use a particular type of vault which only it sells?
A. Cemeteries may impose reasonable regulations regarding vaults and outer burial containers used in the cemetery. For example, a cemetery with a high water table would be within its rights to prohibit the use of plastic vaults. However, when the purpose of the cemetery regulation is to restrict vault sales to itself rather than promoting legitimate concerns, the regulations can be challenged as unlawful restraints of trade.
Q. What are the preneed trusting requirements for cemeteries?
A. If a cemetery (or a funeral home) sells a casket, the seller must place 100% into trust. If a cemetery (or a funeral home) sells an outer burial container, monument, maker, urn, or urn vault on a preened basis, the seller must place into trust the greater of 110% of the seller's actual wholesale cost or 30% of the seller's retail price of the merchandise. If a cemetery sells cemetery services, such as opening and closing graves or installing vaults or monuments, it must place into trust 70% of the seller's retail price of the services sold on a preneed basis. If grave plots, mausoleum spaces, and columbarium spaces are sold on a preneed basis, there is no requirement to place preneed funds into trust. However, 10% of the gross proceeds from these sales must be placed in endowment care funds. It is also important to note the preneed trusting requirements do not apply if the cemetery is owned and operated exclusively by a church that is exempt under Section 501(c)(3) of the Internal Revenue Code, by an established fraternal organization, or by a municipal, state or federal government agency.
Q. May cemeteries sell mausoleum spaces on a preneed basis when the mausoleum is not even under construction?
A. Yes. However, the sales contract must provide the buyer with a written right of cancellation if the construction of the mausoleum is not begun within three (3) years after the contract is entered into or if the mausoleum is not completed within five (5) years after the date of the contract. If either of these contingencies are not met, the buyer may receive a 100% refund of all monies paid under the contract.
Q. What action should a funeral home take if it has a problem with a cemetery?
A. First, try to contact and work out the problem with the cemetery management.
If that is unsuccessful, feel free to contact OFDA. Funeral homes can also take problems to the Ohio Cemetery Dispute Resolution Commission. The Commission has no enforcement powers, but will attempt to mediate disputes with cemeteries. The Commission can also refer violations of the law to county prosecutors and the Ohio Attorney General's Office. Complaint forms for the Cemetery Dispute Resolution Commission can be obtained by calling the Ohio Department of Commerce at
614-466-4100 or going online at www.com.state.oh.us/odoc/real/ then click "crematory registration" and then click "forms."