You can make an agreement saying that the Private Lender will put up the Capital, while you render service and carry out the rehab.

Of course, there were also renderings  from retailers during the process of buying a new kitchen.  

If you buy a $30k house, its hard to do something to that house to render it worthless.

In our case, we are licensed general and electrical contractors, licensed real estate brokers, one of our partners draws the preliminary site and architectural plans and does renderings and we handle all the permitting process.

One  way I stopped this is by saying while I am sorry you’re having financials issues I still need to be paid for services rendered.

@Derrick Jordan, I didn't dive into the financial underwriting because I don't have enough information to render a useful opinion, but I will say that this deal has a major challenge from the outset.The underlying financing is at a really low LTV (50.5%) relative to the asking price.  

If at any point the property owner pays off the overdue property taxes before the lien expires (period may vary by state), the county is the party that earns the interest.Properties that are owner-occupied (as indicated by a homestead exemption showing up on the annual tax bills) or have a mortgage are most likely to be bid on because they have a higher likelihood of being paid off either by the homeowner or the mortgagee (the lender); the homeowner probably doesn't want to lose his/her place of residence and the lender probably doesn't want to lose its investment.If no one has bid on a lien, there are likely issue(s) with the property that, in the eyes of bidders with investor mindsets, render the property valueless, for example:the property has no direct access (landlocked or waterlocked),the property is too small to be built on as-of-right per the municipality's zoning codes,the property is contaminated (a Phase I environmental report would scour records on the property to see if contamination is likely, and if so, a Phase II environmental report would be done and soil, etc. samples would be taken to confirm the contamination),the market fundamentals indicate little probability for profit given the level of risk, such as high vacancy rates, low rents, or slow sale/rental velocity,the property is in a "poor" location due to many of the types of things that turn off people looking for a home in which to live, such as high crime; poor or nonexistent infrastructure, such a streets, water & sewer, etc.; too rural/too urban; neighboring uses detrimental to the property's value, e.g. railroad, warehousing/industrial district, jail/prison, cemetery, etc.I hope that helps!

While it's not clear to me that this specific issue is governed by that type of sentence, I think that it requires somebody with much more knowledge of these particular laws in Illinois to render a better opinion.  

Can someone out there render any advice?

In addition, I would have some type of dated, liability waiver written up for them to sign that states in writing that they legally waive all interest in the existing contract that specifically renders existing contract null and void as of a certain date and time and releases you of any and all obligations of said contract.