Cash flows verses what he shows on IRS taxes net number is the problem. 

check your local laws on how to properly determine if a property has been abandoned by a tenant before you clear it out.  

If the title company issues a 1099 to the IRS would that cause any problems?

Option 1: the 50/50 splitWe can just decide to ignore the differential in hours required by each of us to keep up our properties and can split all returns down the middleOption 2: billing the partnership for his laborWe can determine a reasonable market rate for his labor beyond a certain number of hours per month, and can bill the partnership for his time.

We need a lot more information to determine if you are or are not responsible

This is the outline for the contract that was signed:I, "SELLER", of BLANK Financial (the seller) am the owner of the property located in Pend Oreille County (assessors parcel number: BLANK).Said property is being sold via contract (the contract) to BLANK (the borrower) with a closing date that has yet to be determined.

Very difficult to determine pricing without seeing it. 

If the lease allows a new owner to terminate the lease with 90 days notice, it has to be determined what is the easier/cheaper option.  

One document we used was an appeal letter to the IRS saying that all proceeds from the sale would go towards the lien.

You CPA will have to determine the taxable implications from the “note” verses a “cash” pay off until the note is paid off.