That's why I'm trying to understand condo conversion, which by my understanding doesn't necessitate the splitting of the lot/land.

Are there any modifications to the written lease?

Two modifications I'll suggest:1.

Requests.were.ignored.for.almost.two.years.2 months ago, mortgage holder sends paperwork with amortization schedule and loan modifications to homeowner. 

However, if anything else catastrophic happened down the line I would absolutely need the option of the modification, so I don’t want to do anything to jeopardize my chances in getting a modification.

First is with 118k recorded in 2010 with a bank, the second is with HUD 34k (not loan modification, separate deed of trust).

The majority of small landlord and small business owners I know that do have an LLC, co-mingle their LLC and personal accounts (credit cards, utilities, etc.) so much that a judge would not hesitate to allow the veil of an LLC be pierced.I have also witnessed evictions halted because the tenant pointed out to the court that landlord held the unit in an LLC, necessitating the hiring of a lawyer.I personally would not feel it is necessary for a small portfolio.

Except that this foreclosure of the first would necessitate a public sale at which the bidding for a $500k house needing virtually no repairs would go much higher than $300k.

Selling a property is typically a lot less labor intensive, hire the lawyer to review the inevitable modifications and PSA changes.

Sounds like her children could be helping her with contacting an attorney and the bank to do a loan modification and /or short sale so that she doesn’t have to foreclose.