So your $125k investment yields $250k in net sale proceeds.

It would include a promise to sell the house and split the proceeds between all her grandchildren. 

If you’re truly concerned they may sue, it might be good to contact your real estate lawyer to see how they suggest you proceed in dealing with the situation.

@Devin OtwayIf you use the proceeds of the Solo 401k to purchase your principal residence you can extend the term of the loan beyond the typical 5 years. 

The contract the agent deals with at the lender isn't a decision maker and also the seller will receive no proceeds, so the lender does not see the seller as being on their side.

more than  2K ... if   you selling for 232K  - your  possible  net  proceeds   dont appear to be  huge   ( 25-35K  maybe ) what is the  change you mention ?   

(b) A settlement agent in the disbursement of settlement proceeds shall account for and pay the closing funds to the parties or entities identified for payment of the closing funds pursuant to the settlement agreement approved by the parties to the transaction.

I'd be more concerned if the very first step of the sale process is already proving problematic from the seller's side that you may encounter other problems as you proceed down the road. 

If you do proceed with the property, or others like it, feel free to reach out when you need some Architectural guidance.

The the S&P 500 proceeded to collapse by 32% in March as the coronavirus pandemic grew.