Syndicators do this because most passive investors are not sophisticated enough to realize the "security" of the preferred return means they usually are giving up the potential for massive returns if the deal does well.This next comment would apply for all syndication.  

They have a group of funding sources that will compete against each other, this helps keep the final interest rate within reason, and offer a partial refund if they are unable to secure financing. 

.- There is risk in that the rehab has not been completed and the financing has not been secured so there may be unforeseen issues with the home or lending process that may cost more than the estimated costs which can then reduce profits.- The tenant buyer may decide to not exercise the option or may decide to terminate the lease early which may produce a profit less than the projected returns.- The money partner is not the only owner of the company which owns the property and thus has limited decision making over the property.

When are you going to pay this as your lender has not and now you are in breach of the contract and causing the delay."

I would check this out with a seasoned securities attorney for their opinion/guidance.  

But we are also both very used to corporate and used to having a security of a job.

What do you do to ensure that the tenant is responsible for security deposit disputes since that is the largest reason for owner lawsuitsHow familiar are you with the newly changed laws that can affect you the owner if they are not used correctly?

Loan interest is deductible based on the use of the loan, not the asset securing the loan. 

But, what I'd do, is cite them for breach of contract first.  

Secure the debt by real estate, now we're talking a great partnership deal.