There can be some situations where it makes sense and is reasonable.....but in my experience its often a huge red flag that they are hiding something or trying to bribe you to overlook some deficiency on their end.

There are standards of practice and specific items that they are required to address and note as deficient or missing. 

slight correction  Purchase money is only for owner occ... and its only in certain states with CA OR WA NV AND AZ being ones i know off the top of my headTexas NO WAy you default there even owner occ and they can and will seek deficiency judgements PG or not.

John is absolutely correct (and I'm not qualified to judge, but just a personal opinion) as the lender is entitled to seek a deficiency judgment after disposing of collateral, be it residential or commercial.

If the BK didn't discharge the loan you can look into a deficiency judgement as an additional method of recovering from this investment.  

An LLC will protect you from "internal" attacks - a tenant suing you for a rental deficiency, a contractor for hiring/payment/accident problem, etc.

the agent encouraged you to not worry about an obviously deficient product. 

Daniel,Property managers are not licensed inspectors, but visually look over the property to note deficiencies.

When 2nd lien position mortgages are wiped out at the first mortgage foreclosure, do the banks (note holders) have a right to file a deficiency judgment agaisnt borrower in order to try and recover their loss (at least partially) ?

They will refer criminal acts, but loans are pretty well taken care of through foreclosure and deficiency with the borrowers, I have never heard of this line of concern.