The owner does not want to extend the debt for 30 years.

If it does go to probate, hopefully your brothers and you can amicably go the informal route vs formal (I've worked with families in both when buying properties out of probate and informal is FAR easier).Since there's no debt on the house, maybe you could sell with financing or maybe you could even buy out your brothers with financing -- that way you maintain ownership and just pay them a monthly amount.

@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.

I make around $110k+ per year, live off around $75K, have a mortgage ($1900/mo for rent, escrow, tax), around $40K in equity, and no other debt. 

You’ll need to treat it like a business—handling tenant management, accounting, legal compliance, property maintenance, and more.That said, when done correctly, it’s a powerful tool for building wealth!

Or a legal perspective?

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

Which is better way to legally structure the properties for protecting assets against tenant lawsuits.

Note that legal and transfer costs are not deductible but can be added to your cost basis.

While I do maintain a relatively modest percentage of my assets in money market instruments, corporate debt funds, and high dividend stocks, I remain most comfortable with the investments I specialize in and know best.