"Ripped off" may be too strong as it implies intent - I'm hopeful it's just bad logic.  

I would say better agreements would be:

* You own the condo 100% and _borrow_ the remaining 75% through a private mortgage from them.  They get repaid when you sell or refinance the condo.
* You keep just a 25% stake but don't pay back a loan.  They effectively just bought a 75% stake in the condo.

Borrowing money from family/friends is always risky.  If you and your parents are comfortable with the situation and can reliably keep records of how much is owed at any given time (and how much of the $500/mo is interest) then the loan might be a good option.  If not, and your parents don;t need the income stream from the loan, then I would recommend the second option since it's much cleaner.