@Lucas LeBlanc the municipality  regulations were my exact concerns.

If your interested in being legal th efirst thing you do, before you buy a property, is to study your state landlord tenant regulations.

Under that structure you would be regulated by the SEC and the whole deal should be structured accordingly.If you are planning on having some level of active involvement in the operations and not completely relying on someone (The GP in this case) to manage your capital with the expectation of future financial return on your invested capital then you can go ahead and just go the "partnership" route.

A licensee of the Board shall comply with the Board's regulations, notwithstanding the fact that the licensee would be otherwise exempt from licensure under subsection A."

I did contact the borrower, & she volunteered to just send me the interest due.I will send her a Release of Promissory Note.The title co. did not provide any sub & recon document for us to sign.Their legal dept. copied & pasted some Calif regulations into an email & said they were done.A realtor friend has one I can use, but honestly, I'm going to get some help to fill it out.I looked up the title co on Yelp & see they have horrible reviews from what appear to be legitimate, experienced people.  

My state has taken the stance that transactional funding is a red flag to selling real estate without a license.IE they had to advertise the real estate to get a buyer and that using tran funding is a clear market that they had no intention to close on thier own and its part of their scheme to circumvent the RE brokerage laws.I finally got feed up with the is it OK is it not.. and got in touch with our state regulator.. and advertising any property you don't own in our state is simply not legal.. etc.. but then again they only go after folks if a complaint is filed.. they are well aware of this activity..

@Jason JebelesSome good advice above from @Julie McCoy and @Paul Sandhu I'd just add to be sure you know your local regulations.

@Dmitriy Fomichenko @George Blower @Bernard ReiszIs there an IRS regulation or tax court case that points to the requirement to get a qualified appraisal in advance of an in-kind distribution from a retirement plan? 

Prepare yourself for the worst, if you have not studied your state landlord tennat regulations and educated yourself on evictions find yourself a lawyer in preparation to evict.

@Corie Carpentier This is really up to you and any landlord-tenant laws that exist in your state, HOA regulations, etc.