The reality is we are not in business to protect any other landlord than those who we manage properties for, and the math for our client owners works out much better to get a bad tenant out as soon as possible.We will never give a bad tenant a good reference nor we will never serve as a reference for a bad tenant.

This approach protects the investor’s capital and allows the project to continue operating and eventually regain value.3.

So the idea that "pref equity" without a recorded lien is protected, to me, is simply false advertising.  

The number 1 thing would be to have a lawyer look over the terms and contract to protect you in case something changes for them through the course of the owner financing.

Lastly, have a real estate attorney review the contract to protect your interests and comply with local laws.

Are you protected if there is a correction in the market?  

Liquidity is equity, equity gives you protection from any lien holder whether seller, bank, HML, or PML.

The ordinance itself says it is intended to "protect residential integrity."

However there are some states that protect tenants a lot... 

A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings.