Later that meeting, she arranged meeting with CE and we were talking about the next project.

Does that mean you can't technically buy an occupied property with FHA in WA anymore unless there are arrangements made by seller?

That's where one entity owns too many units in a condo project to for buyer's to be able to get conventional FHA/Fannie Mae/Freddie Mac loans.Unless you got a commercial loan up front and arranged for partial releases its very unlikely the lender will agree to do this.

I agreed to let them stay till tomorrow the 25th but now they informed me they are not leaving because they haven't find another living arrangement.   

The current of the owner of that property just knew it was his fence and didn't know of that arrangement.

Before getting into any kind of arrangement with other investors please make sure that you have a Joint Venture agreement that outlines who is putting in what kind of work and money BEFORE going under contract. 3.

As in, if they have no desire to be an owner, you could just continue the arrangement until you pay them back in full, plus a certain interest amount?

I trust my friend, but I'm hesitant on transferring my money to an LLC in which he controls 50% -- in other words, if things went south, there goes half my money...Has anyone done a similar arrangement?

But I would make sure both of you are perfectly happy with the arrangement. 

Those can run several thousand dollars so the type of arrangement you describe typically does not work on smaller properties.