When I asked for identification documents, he claimed it was too many documents for an investment of "only" $10,000.

but working with someone who is local to your market, who can show you their legal documents that they have used, introduce you to a proper title/attorney office for drafting documents...I mean, nothing is foolproof...but that route will have a significantly higher success rate. 

This goes to the title or escrow agent and along with a HUD or settlement statement documenting the fees paid out clearly states and is agreed to by all parties that the EMD funds are loaned and must be repaid at closing from the assignment fee owed to the wholesaler or from the sellers funds. 

The fact that their documentation is not clear and they are in a hurry to move is a big red flag.

https://www.biggerpockets.com/...12 Frequently Asked Questions (And Answers) About DSCR Loanshttps://www.biggerpockets.com/...8 More Commonly Asked Questions and Answers to DSCR Loanshttps://www.biggerpockets.com/blog/eight-questions-and-answe...What Documents Do You Need for a DSCR Loan?

Document everything. 

You don't have to file "Trust" documents in order to hold a tenant security deposit in trust.

This was also confirmed when I went there to submit the required documents, but they couldn't give me a proper timeline on when it would happen claiming that they were backed up. 

It is important to have a document which spells out the type of wood to burn which is signed so that there can be no misunderstandings.  

Try reaching out to the Thornton Planning Department for any documentation they might have on file.Check Legal Precedents: Look for similar cases in your area.