Is what I want to do legal, is it a thing, and is there a clever way to structure such an instrument where it is legal?

Make sure you get an attorney to draft up all the agreements regarding partnership structure and security instrument for your cash investment.

@James FreeYou could certainly model it out, but practically speaking, I prefer to use the spread between what I can get in public markets vs what I can reasonably achieve on a similar instrument in the private market.

I"ve posted here many times saying HELOCs are a short-term debt instrument. 

My applications reads;“I, the Borrower or Co-Borrower will occupy the property within 60 days of signing the security instrument, and intend to continue to occupy for at least one year;”My Wells Fargo Mortgage consultant and I interpret living in the in-law unit as occupying the property.

This will be instrumental for a successful future.

ACCEPTANCE: This instrument will become a binding contract when accepted by the Seller and signed by both Buyer and Seller.

See Garn St Germain"A lender may not exercise its option pursuant to a due-on-sale clause upon--, (1) the creation of a lien or other encumbrance subordinate to the lender's security instrument which does not relate to a transfer of rights of occupancy in the property; (2) the creation of a purchase money security interest for household appliances; (3) a transfer by devise, descent, or operation of law on the death of a joint tenant or tenant by the entirety; (4) the granting of a leasehold interest of three years or less not containing an option to purchase; (5) a transfer to a relative resulting from the death of a borrower; (6) a transfer where the spouse or children of the borrower become an owner of the property; (7) a transfer resulting from a decree of a dissolution of marriage, legal separation agreement, or from an incidental property settlement agreement, by which the spouse of the borrower becomes an owner of the property; (8) a transfer into an inter vivos trust in which the borrower is and remains a beneficiary and which does not relate to a transfer of rights of occupancy in the property; or (9) any other transfer or disposition described in regulations prescribed by the Federal Home Loan Bank Board.

Borrower shall occupy, establish, and use the Property as Borrower's principal residence within sixty days after the execution of this Security Instrument (or within sixty days of a later sale or transfer of the Property) and shall continue to occupy the Property as Borrower's principal residence for at least one year after the date of occupancy, unless Lender determines that requirement will cause undue hardship for Borrower, or unless extenuating circumstances exist which are beyond Borrower's control.

I have both of them and so far they have been instrumental in creating a viable, long-term strategy.