It's not complicated, and an experienced lawyer will be able to handle it for you, but if it is not done correctly, you can be in a lot of trouble with the Securities and Exchange Commission.  

However, this site thrives on interactions and as such we encourage two way exchanges and look forward to educational and thought provoking ideas relevant to REI.  

Ok, now that you have taken your initial step, below are some quick links to get engaged. http://www.biggerpockets.com/starthere http://www.biggerpockets.com/ubg http://www.biggerpockets.com/meet Setting up Keyword Alerts How to Use @Mentions on BiggerPockets 25 Tips for Real Estate SuccessREI can be very daunting, but, before you go searching for that 1st buy, please take a few minutes to bone up on the tips in link below.http://www.realestate.com/advice/buying-your-first-investment-property/ However, this site thrives on interactions and as such we encourage two way exchanges and look forward to educational and thought provoking ideas relevant to REI.

Ok, now that you have taken your initial step, below are some quick links to get engaged. http://www.biggerpockets.com/starthere http://www.biggerpockets.com/ubg http://www.biggerpockets.com/meet Setting up Keyword Alerts How to Use @Mentions on BiggerPockets 25 Tips for Real Estate SuccessREI can be very daunting, but, before you go searching for that 1st buy, please take a few minutes to bone up on the tips in link below.http://www.realestate.com/advice/buying-your-first-investment-property/ However, this site thrives on interactions and as such we encourage two way exchanges and look forward to educational and thought provoking ideas relevant to REI.

We could have this happen multiple times a year too, so looking for something not too complex.This is a pure business decision in my opinion. do you take money off the table and pay taxes vs keep on rolling over the investment using a 1031 exchange. in 2007 we decided to do a 1031 exchange to save taxes, but had to reinvest into a falling economy. in hindsight we could have done better by just paying the taxes.- also dont forget transaction costs. with such a heavy rotation of investments you will pay huge transaction costs in addition to any taxes.

If not, could you catch her up in exchange for the deed  (provided there is at least 3-5x equity vs arrears)?  

Ok, now that you have taken your initial step, below are some quick links to get engaged. http://www.biggerpockets.com/starthere http://www.biggerpockets.com/ubg http://www.biggerpockets.com/meet Setting up Keyword Alerts How to Use @Mentions on BiggerPockets 25 Tips for Real Estate SuccessREI can be very daunting, but, before you go searching for that 1st buy, please take a few minutes to bone up on the tips in link below.http://www.realestate.com/advice/buying-your-first-investment-property/ However, this site thrives on interactions and as such we encourage two way exchanges and look forward to educational and thought provoking ideas relevant to REI.

"If they ask" be prepared to share with them how you will structure the purchase e.g. conventional financing, 1031 exchange, creative financing, etc.

My approach would be to acquire the lots, clear title and as my exit strategy:1. sell them outright;2. take back paper;3. develop the lot; or4. accumulate a few and exchange them or use them as a down for another parcel. 

If so, then after the HELOC is recorded your co-owner can record a junior deed of trust to the HELOC in exchange for their equity position.