Jhelum Enterprises LLC gained two judgments totaling $54,863.89 towards Oceanside Automotive Service and Towing LLC. In 2011, a Palm Seashore County courtroom discovered that Oceanside’s sole officer, Norman Desmarais, fraudulently transferred the corporate’s property to himself and a brand new enterprise to keep away from paying the judgment, and held him personally chargeable for the total quantity.
In 2018, Desmarais took out a HECM line of credit and refinanced it in 2022, leaving roughly $62,000 out there by January 2024.
In response to the decision, the creditor sought to garnish the funds, arguing that prior attracts had been used for private bills moderately than home repairs.
The courtroom rejected that argument, ruling that simply because a home-owner has entry to funds via a HECM doesn’t imply these funds may be garnished till the house owner truly requests a draw.
“The undistributed funds are accessible solely when requested by the house owner,” the courtroom wrote.
Florida’s structure broadly shields homestead property from pressured sale or creditor claims, with restricted exceptions. The courtroom mentioned that safety extends to undisbursed reverse mortgage funds as a result of they don’t seem to be but within the borrower’s possession and will by no means be accessed.
However the ruling attracts a distinction as soon as funds are withdrawn. The courtroom upheld a separate order requiring Desmarais to show over $250 held in a checking account, discovering these funds had misplaced homestead safety after being disbursed.
The opinion additionally famous that outcomes may differ in instances involving reverse mortgages that present automated month-to-month funds. In these eventualities, funds already owed to the borrower could also be topic to garnishment.
“In conclusion, the trial courtroom correctly discovered the undistributed funds within the reverse mortgage line of credit score have been protected by Florida’s constitutional homestead exemption,” the choice learn.
The ruling marks a query of first impression in Florida, providing new authorized readability on how reverse mortgage credit score strains are handled in creditor disputes. The choice famous that it’s “not last till disposition of timely-filed movement for rehearing.”
