A big problem I see is people exchanging trying to use their attorney or real estate broker to hold the funds.With a few exceptions all of these are considered disqualified parties:A close family member or a controlled corporation,partnership,or trust.OREmployee,attorney accountant,investment banker or broker,real estate agent or broker.If you use these people you can get disqualified from the exchange and create a taxable event.You have to use a proper QI or years later you can get a nice surprise from the IRS.Some clients have asked me and I tell them they need to place the funds and the whole process with a proper QI.No legal advice

You must have it in writing and legally binding.

You may want to consider going to a legal services that will prepare the deed for you, for a few hundred dollars.

It is one important tool in the credit repair tool kit.Dan*Disclaimer: Not to be construed as legal advice.

(assume that I'd be able to get qualified for the loan and that it would be "reasonable" to be able to pay back the 40K in the time specified)after re-reading, i assume the investor would need to be a lienholder from the beginner under any circumstance...but is that even possible, or would I have to buy the house "with" the investor, which i'd rather not do...also, do not dwell upon the legal details of the arrangement, i have people that I could do this with on a verbal contract not to mention a seperate written contract that protected their investment+interest in the event I sold the property for a gain...I'm much more concerned about the actual numbers/percentages and how realistic this proposition is from an investment standpoint, not a legal one..

Regarding this insentive from IRS, I have a deal I am working on where I will be buying a 2 family and renting it with one tenant doing a contract for deed agreement to buy the property.I am asking for 10k up front from tenant so I feel comfortable in that they will not walk or change their mind.tenant says they can get the 10 from their traditional IRA, they do not have funds anywhere else.My question is if we did a CFD they legally wouldn't own the property but would be under a contract to purchase it. so if you haven't guessed my question how does the IRS view this?

The bank coud have tacked on late fees, legal fees, filing fees and other fees to that figure.

I have been doin my research and know the basics of everything, but just needed to tighten up on a few things like getting my contracts i got offline looked over by a RE attorney here in my state, to make sure is legal and learning how to evaluate properties to make it benefit me and the end buyer.

http://www.irs.gov/businesses/small/article/0,,id=106553,00.html Be aware that the heading there says abusive tax schemes; however, it then goes to explain how they are legal or not.As long as it is a Revocable Land Trust it will be considered pass through just as your single member LLC.

Here are two sites that offer legal agreements for Michigan. http://www.rocketlawyer.com/http://www.legalzoom.com/Hope they help.