The small child got into them, allergic reaction, hospital stay, law suit and now she is out of  buisness.

I'm about on the verge of filing a lawsuit against the owner, but I need to get certain things in place if I do go that route. 

When does the class action lawsuit start?

(See my blog on What you can say and not say) to avoid discrimination lawsuits.12.

Find out if the HOA has been sued or have any pending law suit.

So, if the the LLC has a lawsuit from some prior action, it doesn't go away because the LLC changed hands. 

I would not want to face a judge with a borrower filing a lawsuit claiming that the loan was improperly serviced.Loss mitigation is doing borrower outreach to try to resolve the delinquency of the loan. 

Bottom line, you HAVE to pay your agents, regardless if you fear law suit or not.

Yeah when the lawsuit comes because he showed up and did a sidewalk eviction on one of the tenants, he will expect it comes out of your end not his.

That is a very questionable decision.An alternative might be to look into building a SFH with a separately metered two bedroom in law suite over the garage.