You would be best advised to talk with a real estate attorney and a CPA. There is a type of transfer called intrafamily, which is a non-arm's length transfer within family members so the transfer does not trigger a re-valuation by the county assessor's office.
If you need a referral to a local real estate attorney or CPA I'd be happy provide you with one.
But from what I can see it looks like your brother and law should be worried about the taxes... if he ends up selling the house with all the equity you are giving him.
The bank will not lend for MORE than the appraised price. As long as the real estate is worth what is wanted to borrow the bank will not insist you spend more money to buy a place. If they did ALL foreclosures would be selling for more money.