John,you can not order them off the premises but,you can encourage them to go out to lunch or do errands while the inspection is taking place.Give them a written notice on exactly when you will arrive and depart the property and suggest they find something else to do because the inspection will be hectic and disruptive to them.Offer them a gift card to Olive Garden or something to pay for lunch.

It is a gift that keeps on giving. 

I was thinking it would be easier to just pay off the $40,000 they have left on the mortgage and somehow assume the deed, but between gift taxes or what have you, doesn't look like there's a way around this. 

Personally, I have stopped making any loans to owner-occupants at all due as the complexity, cost & risk do not justify the return IMO.If you are dead-set on helping your relative, I think the safest thing to do would be to GIFT them a PART of the down-payment they would need to get a BANK LOAN, with no expectation of getting paid back - you can make an agreement with them that they will pay you back, but know up front that there is probably a greater-than-even chance they will not, and accept that it is really a GIFT and any payments you get back are more than you expect, and "nice to have".

Having your home paid off from a family trust is a gift not many people are blessed to have.

We have discussed selling it but 1) we like the location and think of gifting it to our child when he comes of age 2) we have some emotional attachment.  

I am about to venture in to my first real estate deal and I need a little guidance on how to split fee's with an investor (whom is also a family friend).My Aunt is moving out of the country and selling/gifting me her home in Yorba Linda for $800,000.

The team members went their separate ways and gifted the investment we had made to our first and only client.

A family member can also gift you money for a down payment, but not lend it to you. 

Either way, gifting them the house at some point and the knowledge and understanding of assets, patience, responsibility, cooperation, budgeting, etc...can't be a bad thing.