Associate Attorney
In Jhelum Enterprises, LLC v. Desmarais, decided March 25, 2026, Florida’s Fourth District Court of Appeal confronted a scenario that no Florida court had previously addressed. A judgment creditor — armed with a $54,000-plus judgment stemming from a fraudulent transfer finding — tried to reach roughly $62,000 sitting in a homeowner’s reverse mortgage line of credit. The creditor argued that since the funds were accessible, they were a “liquid asset” no longer shielded by Florida’s homestead exemption. The court disagreed.
The Key Issue: Contingency
The homeowner held a Home Equity Conversion Mortgage (HECM) — a federally backed reverse mortgage — with a line of credit he could draw on at his sole discretion. Critically, he had made no withdrawal requests and testified he had no intention of doing so. The lender and servicer confirmed they had no current obligation to disburse anything.
The court anchored its ruling on that contingency: because the funds are only accessible if and when the homeowner requests them, the creditor’s claim is not ripe. A contingent interest cannot be garnished. As the court put it, “whether the homeowner draws on the remaining funds is a mere contingency that has not yet occurred and may never occur.”
You Cannot Force a Homeowner to Borrow
The court went further, holding that a court simply cannot order a homeowner to draw funds from a reverse mortgage line of credit to satisfy a creditor. Drawing on the Oklahoma case Bowles v. Goss, the court reasoned that forcing a draw would “convert homestead equity into a non-exempt asset” — which would effectively defeat the purpose of the homestead exemption entirely. The court also noted that this outcome aligns with the federal purpose of HECMs: helping elderly homeowners remain in their homes by converting equity on their own terms.
The Important Exceptions
The ruling is not a blanket immunity for all reverse mortgage proceeds. The court was careful to carve out two scenarios where creditors can reach funds:
- Automatic payment streams. If a reverse mortgage pays out in scheduled monthly installments rather than a discretionary line of credit, those payments can be garnished — they are not contingent.
- Funds the homeowner voluntarily withdraws. Once a homeowner actually draws from the line of credit, those funds may lose their homestead protection depending on how they are used. Money spent on vacations or general living expenses (as the homeowner here had done with prior draws) is fair game. Money intended to repair the existing homestead or purchase a new one may still be protected under Florida’s homestead reinvestment doctrine.
The court noted that the $250 in the homeowner’s bank account — proceeds from a prior non-exempt withdrawal — was properly ordered turned over to the creditor.
Takeaways
For creditors, this decision closes off an avenue that might have seemed promising: a judgment debtor cannot be compelled to monetize untapped home equity through a reverse mortgage line of credit. Patience may be the only strategy — watch for future voluntary draws and their stated purpose.
For homeowners and estate planners, the decision confirms that a discretionary HECM line of credit retains homestead protection as long as funds remain undrawn. Homeowners should be mindful, however, that withdrawals for non-homestead purposes can expose those proceeds to creditors.
For lenders and servicers, the ruling affirms that you have no disbursement obligation — and thus no garnishment exposure — until the homeowner actually submits a draw request.
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