50/50 Profit Split From 2nd Position... Possible?

[Paul Jamgotch]

Is it possible to structure a no interest/no payment, six-month, 2nd lien on a flip project with intent to split net profits 50/50 rather than receive an interest rate? Because the actual loan amount is small the 50% of net profit could exceed usury laws.

Consider the following scenario I have run across a few times now:

Purchase, hold, & rehab $227K, HML amount $176K, Net sale $264K. We would have a $51K 2nd recorded. The net profits to split would be $37k ($18,500 each entity).

I understand the risks of fully funding a flip. I am more interested in moving this along as IF this deal was going to get done. The reason I would like a 2nd as opposed to joining the title is because I want the opportunity to foreclose on that second (paying off the 1st) after 6 months if contractor doesn't perform as expected. If I join the title all I can do is try to pressure the contractor to drop asking price, which, is not in the interest of the contractor. TIA