This question is definitely very location dependent - licensing across state-lines is a tricky thing to navigate so depending on the size of the lender they may operate in one metropolis or all over the country.

Quote from @Burke Atkerson: With over a decade of real estate investing experience and over 100 flips, I now provide private money & hard money loans.

Hawaiian real estate law differs from other western states significantly, mostly due to its monarchal heritage and the Bishop Trust influence.The basics are the same as would be in California; determine the condition of title ownership (individual(s), estate (including conservatorship, if appropriate) OR fiduciary acting for trust.Use a qualified private money equity lender to make a loan sufficient to buy out the cash-only beneficiaryThe legal community in HI and Big Island in particular is small.

I work for a portfolio lender as their point person for construction loans, and now I'm trying to grow the division.

We invest in non performing loans and do some private lending as well.

Just a place for lenders to find borrowers and vs vrsa. 

. ;-) The following is just general informationIt sounds as though the seller has an investment to sell, not his private home.

The laws mostly protect me the lender and I have always gotten paid even if there are occasional borrower problems.

I'm considering making private loans to investors nationwide and looking for national home inspection companies to be a central resource.

Treat your family private lender like (or better than) any other private or HML: promissory note and lien recorded against the property.