In your position, I would make sure to disclose the fire issue while also providing documentation regarding proper remediation and replacement.

You can't just always convert an old garage....for example the existing slab must have the proper PSI, vapor barrier, and steel.

Of course, there are a lot of things to look out for...setting up an appropriate contingency reserve for unexpecteds, getting an accurate scope of work, properly knowing what your time-value-of-money costs are going to be, making sure you're contractor is not pulling crews for other customers, knowing codes and getting your permitting right, and the list goes on.

But there is nothing like the eyes of someone that has installed a water heater, replaced a breaker box or laid a floor to really get to the bottom of the true issue on a home fast. 

Might be you're not set up properly to obtain a separate account. 

Next week my 2nd installment of property taxes are due.

If they are on a month-to-month lease, just terminate her tenancy with proper notice. 

Corporate Veil: Courts tend to respect the corporate veil (the legal distinction between the LLC and its owners) more when the LLC is properly formed and operated in the state where the property is located, reducing the risk of personal liability.4.

Or what is the proper way to deal with it?

Take ownership of your mistake and learn to do the proper due diligence recommended above😊