Lease to own w/personal loan

What is the name of your state?Washington State. We have an opportunity but need advice. A dear friend has offered to purchase a home (we've picked out) and do a lease to own agreement. On top of that he will lend us the funds to build a new home on the existing property. The loan is in the amount of the materials only, as we own a small construction co and will do all the work ourselves. The interest rate he is asking for is less than half of what we could get through a conventional bank/mortage loan, not to mention personally we have been through a nightmare in the past 4 years and it will be many more years before we could secure a loan at a reasonable interest rate. Our monthly payments will go against the balance of the loan and lease to own, at the end of the agreement the home value will be considerably more and we will be able to secure our own conventional financing or just pay it off. Our question is: what type of legal documents should we have drawn up to protect our friend (lendor) and ourselves? Should these be notorized and recorded with the county?