In a matter of first impression, Florida’s Fourth District Court of Appeal held on March 25, 2026, that undistributed funds available under a reverse mortgage line of credit on homestead property remain protected by the state’s constitutional homestead exemption and cannot be reached by a judgment creditor through garnishment or by forcing the homeowner to draw on the credit.
The case is Jhelum Enterprises, LLC v. Norman L. Desmarais, Jr., and Oceanside Automotive Service and Towing, LLC, No. 4D2025-0554 (Fla. 4th DCA Mar. 25, 2026). Judge Levine authored the opinion, with Judges Conner and Haw concurring. The decision affirms the trial court’s rulings from the Fifteenth Judicial Circuit in Palm Beach County (Judge Gregory M. Keyser).
Background
Jhelum Enterprises obtained judgments totaling approximately $54,864 against Oceanside Automotive Service and Towing. In 2011 supplementary proceedings, the trial court found that Oceanside’s sole officer, Norman L. Desmarais, Jr., had fraudulently transferred company assets to himself and a new entity to avoid the judgments and held him personally liable.
Years later, Desmarais obtained a Home Equity Conversion Mortgage (HECM)—a federally insured reverse mortgage—with a discretionary line of credit. He refinanced into a new HECM in 2022. By early 2024 the available (undrawn) line of credit stood at roughly $61,000–$63,000. Desmarais had previously drawn about $17,000 over several years for a mix of home repairs, living expenses, and other purposes.
Jhelum pursued garnishment, serving writs on the lender (Longbridge Financial), the servicer, and Desmarais’s bank. It argued the available credit constituted a liquid asset that had lost homestead protection (or never properly had it) and sought to compel Desmarais to request a draw so the funds could be turned over.
Desmarais claimed the undrawn funds retained homestead protection. He testified he had made no draw requests after the garnishment, had no present intention of drawing, and that any future use would be for homestead-related purposes. The lender and servicer confirmed they had no obligation to disburse funds absent a request from the borrower.
The Holding and Reasoning
The Fourth District framed the issue as one of first impression under Article X, Section 4 of the Florida Constitution, which protects homestead from forced sale (with limited exceptions) and is liberally construed in favor of the homeowner. Entitlement to the exemption is a pure question of law reviewed de novo. The party challenging the exemption must make a “strong showing” that it does not apply.
The court held that the undrawn line-of-credit funds retained homestead protection. Access depends entirely on the homeowner’s discretionary request—a contingency that had not occurred and might never occur. A purely contingent interest is not garnishable “property” of the debtor under Florida law. Courts cannot order a homeowner to borrow against the homestead to satisfy a creditor, as that would effectively convert protected equity into a reachable asset and undermine both the constitutional exemption and the federal purpose of HECMs (helping elderly homeowners convert equity while remaining in their homes).
The court distinguished a discretionary line of credit from a reverse mortgage structured to produce an automatic stream of monthly payments; the latter could more readily be treated as a liquid asset subject to garnishment. It also noted that once funds are voluntarily withdrawn, their protected status depends on use. Funds reinvested in the homestead (repairs, improvements, or purchase of a replacement homestead) may retain protection under longstanding Florida doctrine; funds used for non-homestead purposes generally lose it. (The trial court had ordered turnover of a small bank-account balance that represented previously disbursed funds.)
The court relied in part on analogous reasoning from an Oklahoma decision (Bowles v. Goss) and aligned its result with the non-recourse, borrower-controlled nature of HECMs under federal law.
Practical Implications
For Florida estate planners and asset-protection counsel, the case reinforces that a properly structured discretionary HECM line of credit on homestead property does not, by itself, convert protected equity into reachable assets. The protection is contingent, however, and evaporates (or is at risk) upon voluntary draws used for non-homestead purposes. Careful documentation of the purpose of any draw, and consideration of reinvestment timing and tracing, remain important.
Creditors holding judgments against individuals with HECM lines of credit face clearer limits: they generally cannot compel a draw or reach the undrawn balance. They may still pursue other available assets or wait for voluntary disbursements whose character can then be challenged.
Lenders and servicers receive useful clarity that they are not required to treat undrawn discretionary credit as currently payable property subject to garnishment.
The decision does not alter the fundamental rule that a reverse mortgage itself is a consensual lien that can be enforced according to its terms; it addresses only the treatment of the undrawn credit feature for judgment-creditor purposes.
Overall, Jhelum Enterprises v. Desmarais strengthens the already formidable shield of Florida homestead protection in the specific setting of modern reverse-mortgage products. It is a useful precedent for anyone advising clients who hold, or are considering, HECM lines of credit on Florida homestead property.
This article is intended for general informational purposes only and does not constitute legal or tax advice. Taxpayers should consult their legal and tax advisors regarding their particular circumstances.
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