Difference is that for the prior two owner will need judicial foreclosure vs just a demand letter with an REC in order to take the property back.

Ultimately, is this option feasible, I'm afraid it might get complicated, I am also unaware how the loans are structured in the first place and what sort of impact a partnership may have on a loan already in place with the installment of a 'future' partnership (likely we'd have to refinance?)

You may miss out on further profits and you'll definitely get burned if you don't underwrite your next deal judiciously, but you won't go broke on this one deal by taking profit now.

Local and state tax codes are far less complicated, and easier to research and don't play as significant of an impact into your business planning.

They are also a real pain to deal with and are complicated for a first timer.

I suppose I do.The judicial/non-judicial state list is a good starting point for limiting the pain of a foreclosure.  

It can be a very complicated world out there for turnkeys!

This is much more complicated and would need a lawyer to set up.

Even though the property is in foreclosure, in Florida with it's Judicial process taking a minimum of 6 months and then often it taking up to 4 months to get scheduled for a lender sale to the public after judgment is issued...the seller was not under significant pressure to sell for what was owed to keep a foreclosure off their record.

Once construction is completed, you will refinance with a conventional mortgage for the permanent financing.The fact that you have partners will complicate things for FHA and other mortgages.