I would guess they are just ignoring the “warranty” because they’ve had a history of not getting paid. 

I have seen so many unethical sellers while doing business in past, one could write something akin to Borges's Universal History of Iniquity based on those characters. 

His intent is to totally gift the property to his daughter as her inheritance. 

Verifying last 2 years of rental history very important!

I will risk a ton to get him out of his job, but once he is out, we need to be able to support ourselves and take care of our daughter.

Screen well upfront...most residents who do this have a recurring history of it.

Option 1:Pros:Simplicity: You avoid the potential complications of alerting the lender.Maintains Low-Interest Rate: Since your loan is at 3%, you continue benefiting from this favorable rate.Avoids Immediate Full Payment: You won’t be forced to come up with $45k immediately.Cons:Risk of Detection: If the lender identifies the payments coming from an LLC, they might call the loan due.Potential Consequences: If the lender enforces the due on sale clause, you might be forced to pay the remaining loan balance quickly.Option 2:Pros:Transparency: Being upfront might build trust with the lender.Possible Flexibility: Given your solid payment history, the lender might agree to the arrangement.Legal Compliance: You avoid any potential issues with violating the terms of your mortgage agreement.Cons:Risk of Loan Acceleration: The lender could still decide to call the loan due, forcing you to pay the remaining balance.Potential for Higher Payments: If forced to refinance, you might end up with a higher interest rate.Given the pros and cons of each option, but a cautious approach might be best:Consult a Real Estate Attorney: This can give you a clear understanding of your legal standing and potential risks.Evaluate the Importance of the 3% Rate: Weigh the benefits of keeping your low-interest rate against the risks of potentially having to pay off the loan early.Consider a Gradual Transition: This method allows you to continue benefiting from the low-interest rate while reducing the risk of triggering the due on sale clause.

They can usually access the rental history and occupancy rates for any building that you're looking in.

I make sure to keep the same rental criteria for everyone including credit requirements, eviction history, and criminal records to name a few.

Not knowing what to do, they probably didn't even know what to say, so they buried their head in the sand.I'm not justifying this behavior, I find it repulsive, but I've seen it so many times in the decades I've been in this industry that I'm just reporting what history has taught me has likely happened here.It sickens me to be the one to deliver this news--the sponsor should have kept you informed every step of the way and failed in their most basic duty--to communicate with investors.