If so, you can't really pivot to short-term rentals there and have to capitalize on the inn vibe and in-house services.My major question is why is the current owner, who bought it after it sat vacant for twenty years, looking to sell you the problem they can't fix?

You have given the tenant many of your rights as an owner BUT only for a specific time period whereas a deed transfers rights permanently.  

There in fact is no law in Texas saying you cannot have a HELOC on a non-owner occupied property.

If there was no contract/business/transaction between tenant and deed owner can deed owner still be sued?

All funds process through various channels but the PMS (with trust accounting which is very important) keep track of all the funds and then we disburse monthly to the owner. 

For example:Second, under their "About us" link, click on "Management" and you'll see a "Meet the Team" page where there's the following photo/info for this James LaPushner fellow you mentioned (which says he was born in New Zealand):However, if you do a reverse Google image search on this photo, you'll find that it's posted on several other sites, including this one: https://planetaseminarov.ru/people/konstantin-baksht.htmlHere's a photo of him from this page:This page is written in Russian, but if you translate it, it says his name is Konstantin Baksht, he lives in Moscow Russia, and he is the owner and CEO of the international consulting company Baksht Consulting Group. 

As a short term rental owner I can tell you they are not passive and can be a headache.

Also owner may want to use property and just rent it out some.

I owner occupy the home, renting a room to a friend at $650/mo, and the lower unit rents for $1850/mo - total rental income of $2500/mo.

Less headache for the owner.