rebuild construction sfh and finance

[Tim Brown]

I have some idle cash and my builder friend wants to rebuild on lot I purchase.  These lots usually have existing older homes.  He doesn't want to risk his own capital.  He suggests I buy lot outright and use this as collateral for demo and construction loan.  "We sell and split the profits"

It sounds like a win win if there  are profits.  Some details to work out:

1) If I have title to lot and bank has  lien on new house what is best way to handle closing?  

2) Is this deal "fair" for both parties?

3) how should warranty be handled?

[J Scott]

Just to clarify -- he doesn't want to risk his own capital, but he's happy to risk yours?