A well written management contract should clearly spell out what is expected of both the PMC and the owner, to PROTECT both and avoid misunderstandings.

Then an asset protection strategy might be required.

What protection can home owners have against this?

When going into business regardless if it is RE or anything else it is wise to protect your personal assets. 

If you have loss-position assets (ie stocks, bonds, etc..) talk to your CPA to see if the year of deemed sale will be a good time to sell the other assets and thus harvest the losses.

That is what permits protect against.  

@David Ashworth given Florida's bankruptcy protection laws (please verify with an attorney) you may be better off paying off your primary and max leveraging the investment property for asset protection.

So I called adult protective services.

Smokers are not a protected class in any area that I am aware of.  

Initially I was planning to establish an LLC for liability protection, but after several consultations with different law firms, entity structures seem more complicated and much more expensive than what I need just starting out and with and no real wealth to protect.