FLORIDA APPEALS COURT FINDS REVERSE MORTGAGE LINE OF CREDIT RETAINED EXEMPTED HOMESTEAD STATUS

In a matter of first impression, Florida’s Fourth DCA found that a homeowner’s  (Desmarais) unaccessed line of credit stemming from a reverse mortgage on homestead property was exempt from creditors. Jhelum Enters., LLC v. Desmarais, 2026 Fla. App. LEXIS  2309* (Fla. 4th DCA March 25, 2026). 

In 2011 Jhelum Enterprises (“Jhelum” or “creditor”) obtained judgments totaling  $54,863.89 against Desmarais.ⁱ Several years later Desmarais took out a home equity  conversion reverse mortgage (“HECM” or “LOC”) with Longbridge Financial, LLC (“lender”). The loan allowed Desmarais to request advances from a line of credit which, in January 2024,  had available funds totaling $61,685.23.ⁱⁱ 

Jhelum obtained writs of garnishment against Desmarais and sought to force the  homeowner to request the remaining proceeds from the LOCand compel Desmarais’ lender  to disburse the funds to Jhelum to satisfy the garnishment orders.ⁱⁱⁱ The trial court conducted  an evidentiary hearing on the matter.^iv 

During the hearing proceedings Desmarais admitted he previously withdrew $17,000  from his line of credit for home repairs, vacations and living expenses.^v The creditor argued  Desmarais’ mixed-use of the LOC for “non-exempt general purposes” rendered the  remaining funds in the LOC available to satisfy creditors’ claims.^vi 

The trial court disagreed finding Desmarais could not be forced to draw from the LOC  and that the undisbursed balance in the LOC remained protected from creditors under the  homestead exemption.^vii Jhelum appealed.^viii The Fourth DCA noted Florida’s Constitution prevented the forced sale of a person’s homestead and protected sale proceeds resulting  from the sale of a homestead.^ix 

The Court also noted that it was the creditor’s burden to demonstrate by a “strong  showing” that the homeowner was not entitled to the exemption and that Jhelum failed to  satisfy that burden.^x The Court did distinguish between the LOC here, where distributions were at the homeowner’s discretion, and a reverse mortgage with a “designated stream of  automatic payments” finding payments from the latter was the “type of liquid asset  accessible to garnishment and execution.”^xi 

The Court concluded that Desmarais maintained a “contingent interest” in the LOC  funds and that interest could not be executed on by a creditor.^xii The Court did note that future  withdraws from Desmarais’ HECM line of credit might be subject to garnishment depending  on the intended use of the funds.^xiii The Court noted if Desmarais drew on the LOC, he could  request a hearing and preserve the exempt status of the withdrawn funds by demonstrating  the funds would be reinvested in a legally permitted purpose like home repairs or a new home purchase.^xiv

Notably, the Court also explained that any use of the funds “for other non-exempt  purposes” would destroy their protected status and subject the funds to garnishment and  execution by creditors. 

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1. In a matter of first impression, Florida’s Fourth DCA found that a homeowner’s (Desmarais) unaccessed line of credit stemming from a reverse mortgage on homestead property was exempt from creditors. Jhelum Enters., LLC v. Desmarais, 2026 Fla. App. LEXIS 2309* (Fla. 4th DCA March 25, 2026). Desmarais took out a home equity conversion reverse mortgage (“HECM” or “LOC”) which LOC, in January 2024, enabled the homeowner to draw up to $61,685.23

2. Jhelum, one of Desmarais’ creditors, obtained writs of garnishment against Desmarais. Jhelum sought to force the homeowner to draw the remaining proceeds from the LOC and sought to compel Desmarais’ lender to disburse the funds to Jhelum to satisfy the garnishment orders. After an evidentiary hearing, the trial court refused and Jhelum appealed. The Fourth DCA agreed with the trial court.

3. The DCA explained the Desmarais maintained a “contingent interest” in the LOC funds and that interest could not be executed on by a creditor. The Court did note that future withdraws from Desmarais’ HECM line of credit might be subject to creditors’ claims depending on the intended use of the funds. Specifically, if Desmarais could demonstrate the funds would be reinvested in a legally permitted purpose like home repairs or a new home purchase those draws would remain protected under the homestead exemption.

ⁱJhelum Enters., at *2. 

ⁱⁱ Jhelum Enters., at *3. 

ⁱⁱⁱ Jhelum Enters., at *3-4. 

^iv Jhelum Enters., at *5. 

^vJhelum Enters., at *5. 

^vi Jhelum Enters., at *4. 

^vii Jhelum Enters., at *6. 

^viii Jhelum Enters., at *6-7. 

^ix Jhelum Enters., at *7-8. 

^xJhelum Enters., at *8. 

^xi Jhelum Enters., at *8-9. 

^xii Jhelum Enters., at *11. 

^xiii Jhelum Enters., at *11. 

^xiv Jhelum Enters., at *11-12. Remaining references to this case are to this citation.

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