You may be violating some federal/state laws since you'd be doing a sub 2 with no intent to pay the underlying debt.

It's against federal law to advertise "no children".

The federal fiscal cliff debate outcome could change your course so watch closely.

.$(7,273)Tax Depreciation on Building30 TAXABLE NET INCOME (LOSS)........$141

Federal Government regulations are very complex and even when we might think that we are doing it in the correct way, a federal inspector can see it in a different way, which does not excuse anyone from penalties and fines.

If she will recognize a taxable gain on selling it to you, that could be a problem.If her basis is below the sale price of 110k she will recognize gain on the difference.

At some point this becomes a state vs. federal issue.

Dan referred us to the bartering story as an example of how a number of sequential trades were used to trade something small and inexpensive for something big and costly.Of course it can be done in a series of taxable events in a fashion similar to the paper clip story.

Bear in mind that engaging in seller financing requires compliance with both state and federal laws as well as the "new" responsibilities for those who sell, but do not finance.There are numerous threads here on state and federal compliance issues and the need to set up a Compliance Management System that can give you some sense of what needs to be done.

Since you did't have a security agreement, a deed of trust, you can't use a non-judicial foreclosure, you get to go the judicial route going to court again.Selling that way to an owner occupant, you have a bigger issue, it is a financing arrangement and you have federal law to comply with, Dodd-Frank.