Lending capacity should only matter to those with large borrowing needs and require large legal lending limits but that wouldn't apply to hard money lenders anyway.

I am starting the legal process as we speak and depending how many more we can make this a class action law suit. 

Before you sign anything, definitley pin down the timeline for permitting and building.

It seemed like most the folks you have on staff are CPA or other, but no specific legal experts.

@Asher M.Possible, yes but like your lender pointed out it's going to be difficult to pass the self-sufficiency test (SST) for a legal 3-4 unit property.

To avoid reducing your lifetime exemption, you could gift equity incrementally, but this requires proper legal structuring (e.g., fractional ownership transfers).

Same with permits .

Your client should consult a real estate attorney to draft an agreement with the ex and ensure there are no legal or tax issues, especially since this is an investment property.

The seller has the two lots legally separated, but due to deed restriction imposed by the subdivision development, found that building a house on the “tennis court” lot was not allowable. 

Seek legal advice, however, what I understand is that there are really two way to wholesale that is legal in the state of Arkansas.