what documents are necessary to finalize a private real estate purchase and sale under FL contract law

The answer is simple, although I am not a Florida lawyer, in any real estate transaction the way to protect yourself is to retain a local real estate lawyer to draft a contract and a notice of contract in recordable form and record the lease at the registry of deeds. This lawyer should also be able to give you tax advice on which method is more favorable to you. Get it in writing, signed, notarized, reviewed with a competent lawyer.

According to the facts as you present them, your method of purchasing the home is not advisable. You are bearing considerable risks in structuring the purchase as you describe. For instance, the current lender may have a right to call the loan in the event the property is sold. It is vital that you consult a Florida real estate attorney before proceeding.

You are basically structuring a lease with a purchase option where $700 is rent and the other $700 per month is towards your purchase price. The seller has been advised to call it all rent to avoid the problems associated with trying to remove you form the property if you default. Under your option a foreclosure action would be required and you would be entitled to any equity in the home upon sale. Under the seller's option, all they would have to do is file an eviction action, which is generally much faster than a foreclosure, and he would not have to return any of the money paid towards the purchase.

I recommend you seek out an attorney to assist you with this purchase. That's a lot of money at risk to try doing it yourself. If you got injured or had some catastrophic event that prevented you from making payments, I am sure you would be very upset if you lost the house and did not get any of your money back.