In addition, the tax implications are better on a refinance which you will be able to deduct. 

However, after running the numbers accounting for insurance, PMI, taxes, vacancy, capX, property manager, etc. the property is estimated -1.85% cash on cash return (-$600/mo) once I fully rent the property.

We did live in the house for 2 of the last 5 years, so we wouldn't have to pay capital gains tax.

If you use Zelle that is probably only going to one of them, so the other person could claim they never received the deposit.

I finally sold it for a small fraction of what I paid for it, but I was out from under the HOA fees and taxes which at about $1,700. per year, which is a sizeable sum for me, and as we know, these fees increase every year.Bottom line is, DO NOT purchase property there for an investment. 

without comparing property tax and maintenance costs the 1% rule is meaningless.

I owe no back taxes and I am currently up to date on my mortgage.

What is the current tax on the property?

Congratulate them—they now get to file two sets of tax returns and pay the associated taxes for each.Confirm all of this with a lawyer if it bothers you.

The next neighborhood over (literally across the street) is pretty nice, but falls in a different township that has higher property tax, and then the next neighborhood (about a 4 min drive and 15 minute walk) is much lower end, and while fine class C-ish area, you can't push rents much, and the village has its own income tax, so you will pay 2% of your net to the village...But back to first comment: take 4-5 days and travel to each.