An attorney attempted to arrange a loan modification, and advised my mother to stop paying the mortgage payments.One thing I did understand correctly was the gentrifying trend of the neighborhood, and the house has since appreciated in value to around 890K(adjusted comps analysis).  

These numbers represent what would be required to payoff the Hard Money loan and get all your cash back.Totally agree with @Nghi Le regarding getting Refinance loan arranged first.  

does this land have that kind of arrangement with tax offices? 

Sellers will often let their leases expire when planning to list the property for sale because they don't want the complications of trying to arrange a showing with tenants.

We know about the due diligence regarding the actual property, but wondering if there is a "check list" of sorts that should be worked through regarding the partnership arrangement? 

Unless the $115,000 she is already approved for is some type of special loan arrangement, she should be able to use it to purchase a multifamily home as long as it doesn't exceed that amount --- or if it does, she can use some of the $95K to bridge the gap.  

You have to pay out of pocket or make arrangements with the provider, and then you get the money back after the fact.

Rereading OP's post, I would suggest running this arrangement through a loan servicing company that has a licensed mortgage broker experienced with hard money. 

You still get the benefit of their experience and I think it would be a less complicated arrangement.

You should have them contact their insurance company and they can work out the arrangements for them or if they have a case manager that can help them look up skilled nursing facility near them.