Then draw up a contract with whatever he prefers and have all parties sign.

Property Manager has advised its not worth the additional expense which could be considerable.

So you put up $5K consideration for a 90 day option.  

This may change your strategy considerably, so you should explore this topic first.

I don't want to fall into the trap of buying because I feel I have to, but that said I've got cash sitting around drawing 0.01% that I need to do something with and this seems to be the best in my area, other than a distressed property I'm planning to snatch up if the current under-contract falls through.  

As long as the financial considerations (rent, utilities, appliances) and ending date are the same, you can change any terms you want to.  

At that time I had worked in many places they owned and ended up as a Funding Control Officer who approved draws on all kinds of construction loans they offered.  

It has pros and cons. pros: the liability is within that LLC, I.e. if you are liable in a lawsuit, you don't owe more than the value of that LLC, I.e. the house.cons: might be harder to get financing. also more paperwork.There are more to it, but the points above stand out from most people's consideration.

Decided to save on inspection draw since it was such a quick closing. 

To be fair to your Seller though, she may want to have an attorney draw up the Promissory Note to assure her interests as a Lender are protected.