(a)(1) Each preneed dealer which sells burial or funeral merchandise on a preneed basis or preneed burial or funeral services shall establish and maintain a preneed escrow account.

(2) With respect to each monument and outer burial container, and except as otherwise provided in paragraph (3) of this subsection, the amount to be deposited to said escrow account shall be not less than 35 percent of the sales price of such monument or outer burial container; in no event shall the amount deposited be less than 110 percent of the wholesale price of such monument or outer burial container. For any other burial or funeral merchandise, the amount to be deposited to said escrow account shall be not less than 100 percent of the sales price of such merchandise; in no event shall the amount deposited be less than 110 percent of the wholesale price of such merchandise. If the contract of sale shall include grave spaces or items not deemed to be burial or funeral merchandise, the portion of the sales price attributable to the sale of the burial or funeral merchandise shall be determined, and it shall only be as to such portion of the total contract as constitutes burial or funeral merchandise that the deposit described in this paragraph shall be required. In the event that the sale of burial or funeral merchandise is under an installment contract, the required trust deposit shall be a pro rata part of the principal portion of each installment payment, such deposit only being required as payments are made by the purchaser for such burial or funeral merchandise. In the event the installment contract is discounted or sold to a third party, the seller shall be required to deposit an amount equal to the undeposited portion of the required deposit of the sales price of such burial or funeral merchandise at such time as if the contract were paid in full.

(3) With respect to a monument or outer burial container the itemized sales price of which does not include the installation of such item, 100 percent of the installation cost shall be deposited in the escrow account.

(4) With respect to cash advance items and the sale of preneed funeral or burial services, the amount to be deposited to said escrow account shall be 100 percent of the sales price of such funeral or burial services or the full amount of a cash advance item. The time and manner of deposit shall be the same as that specified for deposit of burial or funeral merchandise sale funds to the escrow account.

(b) The deposit specified in paragraphs (2) and (3) of subsection (a) of this Code section shall be made not later than 30 days following the last day of the month in which any payment is received.

(c) The preneed escrow account shall be established and maintained in a state bank, state savings and loan institution, savings bank, national bank, federal savings and loan association, whose deposits are insured by the Federal Deposit Insurance Corporation or other governmental agency, or a state or federally chartered credit union insured under 12 U.S.C. Section 1781 of the Federal Credit Union Act, or other organization approved by the Secretary of State which is located and doing business in this state. (d)(1) Funds may be released from the escrow account when the burial or funeral merchandise is delivered at the time of need or to the purchaser at the purchaser's request or, in the case of a monument, attached to realty, or at such times as described in the rules and regulations promulgated by the Secretary of State. A preneed dealer is prohibited from requiring preneed delivery to the consumer as a condition of the sale. Outer burial containers may not be delivered prior to need. Deposits made from funds received in payment of preneed services shall remain in the escrow account until such services are performed, at which time said funds may be released to the preneed dealer. The trustee may require certification by the preneed dealer of delivery of merchandise or performance of services before release of funds.

(2) The funds on deposit under the terms of this subsection shall be deemed and regarded as escrow funds pending delivery of the burial or funeral merchandise concerned and said funds may not be pledged, hypothecated, transferred, or in any manner encumbered by the escrow agent nor may said funds be offset or taken for the debts of the preneed dealer until such time as the merchandise has been delivered or the services performed; but after delivery of the burial or funeral merchandise concerned.

(e) At any time, in the event that the preneed escrow account contains an amount less than the amount required by this Code section, the preneed dealer shall, within 15 days after the earlier of becoming aware of such fact or having been so notified by the Secretary of State, deposit into the preneed account an amount equal to such shortfall. In the event that the Secretary of State and the preneed dealer disagree regarding the amount of such shortfall, no penalty shall be imposed upon the preneed dealer for any failure to comply with this provision unless such failure occurs after notice and opportunity for a hearing as provided in Code Section 10-14-23.

(f) Upon a finding by a court of competent jurisdiction of failure to deposit or maintain funds in the preneed escrow account as required by this chapter or of fraud, theft, or other misconduct by the preneed dealer or the officers or directors of the preneed dealer which has wasted or depleted such funds, the preneed dealer or the officers or directors of the preneed dealer may be held jointly and severally liable for any deficiencies in the preneed escrow account.