Dave, my advice on this one...
Run away! Quickly.
Your instincts are correct, and whenever anyone asks for such an outrageous request, it's best to leave such craziness to someone who feels the need to be involved in lengthy expensive litigation, because that's where this one is headed.
There are plenty of great homes out there that are being offered for sale by legitimate sellers and not by potential scam artists. Move to another home...this one's not worth the headaches.
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