They showed me proof of ownership and credit card statements to back up there claim.

Make sure that your partner has a track record in doing the thing they claim they know how to do, before releasing the money;3) Do you know what you're doing.

While you are generally correct that permission can defeat an adverse-possession claim, there is also this concept called “easements” and “licenses” that can become irrevocable in certain situations.

Did the mortgage have to be a certain number of years unpaid to make that claim?

Now the texts and emails are coming in saying they will sue me in small claims.  

If the brothers cannot get along and wont shake hands:I am going to the courthouse tomorrow to record my contract on the deed (I believe I have a claim on this property...

Is it possible to have a property gifted or quit claimed from a family member, appraised and seek out a mortgage towards a portion of the value of the home?

,The police report will be needed to file a claim with your insurance.

He also claims he's a realtor and that he knows the house is not going to take more than 2k for repairs or cosmetics.

You sign a quit claim deed to undo the deal if you don't perform.