The irony is that although you think "having to pay thousands of dollars" for an attorney is a bad idea, the other 2 parties clearly thought the property was worth the legal risk-- they were willing to risk their own thousands of dollars, a breach of contract, and loss of the asset over it, not to mention some sort of likely punitive damages since they were a lender and the property was REO.

Even further, soliciting for a JV into a loan can be regarded as a violation of securities law. 

@Lonnie Waliczek  HML  exist because of what you just found out.. its far and few between that you can find a bank that will do flip funding.you must be exceedingly strong financially I mean to the point the bank feels that if you goof up the flip you have other means to pay them back and that their security is not just in the asset like most loans.I have had 7 figure flip funding lines for going on 20 years now it took me 10 years with the same banker to get to that point.. we started with 100k and ended up at 15 million at one time.. but it was over the course of Many Many years.. and super strong financials and income.We started with HML and private money.. although to be fair I owned the Hard money company  LOL.

Additionally you are more "secured" from lawsuits when you have liens on property you own. 

Bro dont pm anyone the adress untill you have secured somthing people are sleezy and will take anything they can out of you if you give them the shot make sure you have somthing contracted first with a person you have a good gut feeling with.

I have seen parties use this before as a bargaining chip to get their attorneys fees paid before they agree to release the earnest money to the other party.This is why you want language that says contractually if that party is due the earnest money for a breach of contract then the holding escrow company can release the earnest money to the non-breaching party without the breaching parties consent or approval.No legal advice given. 

@Erick Harbert  you should actually talk with a securities attorney... there are a lot of rules and its much more complicated than just writing an agreement and getting insurance.and putting partners names on deeds is probably not what you want either. 

In my experience, all cash purchases, no financing, except for some Canadians who are able to secure lending in Canada for U.S. property.

The owner is retired and lives off her social security check which isn't much.

This will lower the mortgage amount, potentially making it more possible for you to secure a loan.