Many folks these days are opting not to work on Subto's as that strategy has become commoditized and marketed by big industry gurus which now in turn has led to the lenders taking notice and starting to call the notes due, since a subto scenario is a technical default, unless there was a formal assumption done. 

If there is a signed written formal lease in place, she most likely has breached several provisions by now.

Seeking advice on how to formalize an agreement with a partner to flip a house together and how to hold title assuming that we would not be creating an LLC until after a "trial period".

How you formalize the money situation could make a difference to these relationships.  

Can someone provide some guidance on how to go about the formalities?

Lesson learned and will be more careful in the future.At this point, I am going to have an attorney send a formal letter to cancel the contract and return part of the down payment less the work that's done.

-Purchase price = 88,500-Amount currently owed = 70,340-ARV =$145,000 (NOTE - we have not gotten a formal appraisal, basing this off comps in the area)-Lease= Signed 12m lease at $1125-Current Monthly Mortgage = $617-Credit score = 792-City = Greer SC

Leases, although it feels too formal to do with friends, are really important should their be any disagreements.

There's no way for an agent to know every problem a property will have before you do a formal inspection.

Over that weekend, the wife and I decided that paying this much for the credit did not make sense for us right now for various reasons...so, the evening of Sunday April 29th I formally submitted for a full refund via their simple refund request form online.