In general, either way I can still attempt to setup a wholesale contract with the seller and then proceed with the course of action to work with an attorney and broker?

As a lender I want to release money as the construction proceeds. 

How can the seller or I proceed, with my equitable interest?

You need to proceed very carefully.

If there was and they have a copy of it you may have to go through formal eviction proceedings (may have to anyway...I'd plan for it).

They should be paid at closing out of the seller's proceeds. 

Judicial and Non Judicial foreclosures are the two main type of foreclosure proceedings.

I don't want to give up on this, but just not sure how to proceed.

All contracts, options, or other devices not based upon a substantial consideration, or that are otherwise employed to permit an unlicensed person to sell, lease, or let real estate, the beneficial title to which has not, in good faith, passed to such party for a substantial consideration, are hereby declared void and ineffective in all cases, suits, or proceedings had or taken under this chapter; however, this section shall not apply to irrevocable gifts, to unconditional contracts to purchase, or to options based upon a substantial consideration actually paid and not subject to any agreements to return or right of return reserved.

As for your situation are you willing to proceed with Airbnb if the neighbors are complaining to you?