Construction deficiencies happens, i.e. the contractor was sloppy, filled up the foundation on one side when receiving concrete, then, after they figured out they were running out of concrete, they spread the remaining truck or so over the slab. 

On the South Side, the tenant you want to attract might not care so much about the deficiencies of these cabinets. 

The contingency reserve may be released only if required, necessary, and unforeseen repairs or deficiencies are discovered during the renovation.

The Bx circuitry often has integral deficiencies from the clamps, from the dirt and scale built up on the armor and the clamps, and poor installation whereby the installer yanked too hard and split the armor.The only safe way to add a grounding conductor on a Bx circuit is to rewire, or use the GFCI methods already discussed.Here is a link to educate yourself.https://www.ecmag.com/section/codes-standards/type-bx-cable-hazard-warnings-and-moreHire a professional, wiring is not hobby.Stephen

The property we have our eye on has a deficiency around $35,000.  

Yes an architect should be able to identify any code deficiencies that would need to be corrected in your kitchen & bath.

One of the partners will need to be strong enough to get it done.If you default they will foreclose and sell the property and come after you for any deficiency.

Some states use judicial foreclosure, others non-judicial, so the process and laws are going to be a bit different between states.Also check to see if that state allows deficiency judgments. 

The contingency reserve may be released only if required, necessary, and unforeseen repairs or deficiencies are discovered during the renovation.

However my understanding is that they could potentially seek a deficiency judgment against the borrower if they chose to (although this is likely fruitless for the lender and I don't believe often pursued).