Selling A House And Giving Previous Owner Proceeds

[Chris Crawford]

I'm about to a deal with someone who is in foreclosure. I've agreed to pay the reinstatement amount in exchange for them signing the deed over to me. At that time I will get the house cleaned up and list it on the market and when it sells I've agreed to get reimbursed my costs for reinstatement plus any other costs plus a fee for my efforts. The rest of the proceeds will go to the previous owner. I want to make sure I do this correctly from a tax standpoint since all I'm making is a flat fee. Since the previous owner is getting most of the proceeds does the closing attorney issue him a 1099S and then issue my company one for a much lower amount? Any advice would be appreciated.