He has two other properties he could move into and still keep control of the other units, I know it's backwards and illogical WELCOME TO MY WORLD!  

Taking control of my life!

What is appropriate is a properly constructed package built on a solid commercial policy form with the ability to offer appropriate coverage for assets under any stage of occupancy or renovation, a simple monthly reporting format with no minimum earned premiums, the ability to waive co-insurance requirements, with no location limits, with the ability to insure multiple controlling entities, offer coverage in all 50 states, special form coverage with theft and vandalism and the ability to actually reduce premiums incrementally by aggregating locations, just to name a few little things.Hope this helps.

Signed lease, partial payment, transfer of possession and control of the premises smells like a tenancy to me.You would be wise to see an attorney, and quickly.

If you control the property w/ an assignable contract or inside of a trust then it's not illegal.  

Don't rationalize a bad deal into a good one by using arbitrary % and/or depending on future events I have no control over.  

Avoidance just makes things 10 times worse and ultimately it will come out you just do not control how it happens at that point and have lost all trust with your partner from keeping things from them.No legal advice given.

Figure out how to control your environment first, and then get tools to help you expedite the process!

Be clear with the seller, you buy real estate with a P&S contract with earnest money at risk.Be clear with the buyer, that you either sell real estate you control, or cleaner and with fewer legal issues, you assign P&S contracts.  

You have no control over how a seller reacts to your offer.