And it was a major concern but the title companies there would give gap insurance if anything got recorded between closing and the actual recording of the debt instrument. 

Thus they're either buying equity, debt, or some other type of security instrument.  

The reason I for mean is what if there is problems with encumberances that have come up since the recording of the instrument your buying..

An equitable beneficiary interest in a trust is a note, a valuable exchangeable instrument.

LLC is just a fine vehicle just not the asset protection vehicle that many think it is.Asset protection for multi millions in TRUE equity is done with a combination of all these instruments and usually will cost you 25 to 40k to set up with any hope of really sheltering yourself.. 

Recorded instruments affecting title are missed multiple times a day every day. 

"(b) Due-on-sale clause means a contract provision which authorizes the lender, at its option, to declare immediately due and payable sums secured by the lender's security instrument upon a sale of transfer of all or any part of the real property securing the loan without the lender's prior written consent.

Surrounding myself with RE savvy folks was instrumental. 

Is there a way to pay him $270k "on paper" so he doesn't get hit with a long term capital gains tax at 15% and then pay him the remaining balance of $180k over time through a consulting agreement or other instrument where he would avoid the tax. 

or is a HELOC possible given I am not on the security instrument?