What is the amount owed?

And without touching the principal! 

Perhaps you can bend a little more, but draw up a contract with stipulations stating that you can front him a portion of his money through the $750, but it will be deducted from the final amount owed once closing is complete.  

The principal paydown and tax shelter still seem preferable to bringing 20k+ to closing IMO.

Question: If I approached the tax assessor with an offer to purchase the property for less than the value of the lot (in resale condition) would they wipe away the taxes owed and sell it to be able to start collecting on that property?

Second question, how do we make it legal so that his money is secured by the property and that I owe it to him? 

Look into the IRS definition of contractor vs employee.But simplistically... if you don't set her days and hours then you don't owes taxes etc.

When people can't make the monthly payment on a loan with a $30k principal balance, there's a bigger problem then unemployment.

You have no agency (agent/client) relationship with the seller and you are free to interact with the seller as an investor with no compensation owed to your broker. 

If my number was that far away from the owed amount or his asking price I would probably not waste any more time on it.Just my opinion.Good Luck.Bill