First: recognize that you made a mistake here. Accepting the money without a contract is only going to confuse things. Pay the money back, (borrow from the First National Bank of Mom and Dad if you have to).
While doing so, tell Roomie (and RoomieDad) that you want equity. Explain that you like the idea, and think you have a lot to contribute. Also explain that if they're not interested in giving you equity, that's cool-- you haven't signed anything giving up the IP on what you wrote, and while you're happy to let him use it for his class project, you retain the commercial rights to your code.
Try not to make it sound adversarial. Explain how psyched you are about the idea. And, when you get a revised contract from RoomieDad, get a lawyer of your own to look it over before you sign it. (Again, prostrate yourself before Mom and Dad if you have to-- it's not pleasant, but an hour of a lawyer's time is worth it.)
It sounds like you're not that far into the project, so if that's correct, I wouldn't even worry about what happens to the modest amounts of IP you've already written. If they can't do this project without you, all you have to do to regain control of the situation is stop working on it until everyone has agreed to terms you're comfortable with.
I agree that you don't want to be adversarial -- just explain that you're not comfortable with those terms, that you hope you can work something out with them that makes sense for everyone, and if you can't, wish them luck with their project.
Two things to remember: first, if something can't get sorted out amicably, these aren't the right people to be working with anyway, so you're better off finding that out up front. Second, if you're the only one who can deliver a product, you're always the one holding the cards.
I haven't cashed the check yet, but I was approaching this as helping a friend out in exchange for lunch money or something so I feel like I should keep it?
You can keep it, if you intend to keep working on it. But don't sign the crazy contract, and don't agree that what you're building belongs to your friend except as it pertains to his use as a school project. If you want to commercialize it (and maybe if he wants to be involved), you should retain all rights to do so...and it sounds like any contract that involves your roommates father isn't going to be acceptable--he's a lawyer who thinks his son farts rainbows...you need to set the terms. I don't mean "go over the 17 page contract of doom with a pen and make a few changes"...I mean start from a blank page, specify the terms, state your ownership position (100% unless you want to partner with this cat on a future business), and hand it over. It'll only be one page, so even his dad will be able to understand it.
That is his money, not theirs. He doesn't need to pay it back to demand changes to the agreement (equity or otherwise). And he gets nothing if he gives it back.
Since he did the work for hire the IP rights belong to the partner, not to him. At least, he doesn't have the ability to win a court case there due to the mismatch in legal representation.
Again, do not let the dad write even one word of the contract. Signing the dad's contract will be way worse than walking away from the project.
It's not at all clear that this is a work for hire, in the absence of a contract-- he's not an employee, and the relationship is vague. I recommended paying back the money paid so far, so as to defuse any potential "work for hire" claims.
This is perfectly clear from a legal perspective: the programmer guy (the OP) owns all the IP that he created. Don't pay the money back, just keep going.
It looks like "a work specially ordered or commissioned for use as a contribution to a collective work" to me. But, again, I agree that he should keep whatever money he has earned.
Software actually does not fall into that category. What that category means is "magazine article." If you go further down in the page, you'll also note that one of the other stipulations is that there is an explicit written contract stating that is a work for hire.
this page probably explains the situation better than my random comments:
While doing so, tell Roomie (and RoomieDad) that you want equity. Explain that you like the idea, and think you have a lot to contribute. Also explain that if they're not interested in giving you equity, that's cool-- you haven't signed anything giving up the IP on what you wrote, and while you're happy to let him use it for his class project, you retain the commercial rights to your code.
Try not to make it sound adversarial. Explain how psyched you are about the idea. And, when you get a revised contract from RoomieDad, get a lawyer of your own to look it over before you sign it. (Again, prostrate yourself before Mom and Dad if you have to-- it's not pleasant, but an hour of a lawyer's time is worth it.)