Basement rentals are illegal on the Virginia side of the border.

I appreciate that because I do think it's bordering on dangerous.

Eventually as you work with someone over a long period of time, you'll learn what to expect from each other and can relax on the formalities.

@Wayne Brooks yeah it seems like conventional loans for the 4 plex are on the border. 

You don't need pre-approval or anything that formal but at least know that they will refi the property given an appraisal.For further research, read up on the BRRRR strategy (Buy Rehab Rent Refi Repeat).

In the absence of formal or informal lease terms (and considering the lack of rent), the sons are probably not tenants and thus eviction may be an inappropriate solution. 

Keep in mind that, like a "no-point" loan, the interest rate will be higher than if you obtain a loan that has costs associated with it.noteA legal document that obligates a borrower to repay a mortgage loan at a stated interest rate during a specified period of time.note rateThe interest rate stated on a mortgage note.notice of defaultA formal written notice to a borrower that a default has occurred and that legal action may be taken.original principal balanceThe total amount of principal owed on a mortgage before any payments are made.origination feeOn a government loan the loan origination fee is one percent of the loan amount, but additional points may be charged which are called "discount points."

I found a couple on the border of Sac/Elk Grove and in the good Elk Grove school district.

Tell them you will pay "appraised value" then hire a formal appraisal.

You can clearly spell out, in the articles, who owns what share of the company, how proceeds from sales/revenue are distributed, and it eliminates the potential for someone trying to "switch the percentages" down the road so to speak, because it is a formal legal structure.