In reality though if someone has enough money they can pierce those veils given time and money and depending what the severity of the infraction is.

I have worked with 1031 exchange investments for over 13 years specializing in fractional ownerships (DSTs, TICs).

Considering it was something more than a minor infraction it very well may not be on the local level.

Their thinking:  as long as we're here, might as well cite for some infraction, like a baby stroller in the hallway. 

If they did tell me and I allowed them to move forward to the background check, I will consider infractions on a case by case basis but may still deny the applicant. 

A fine may be reduced, knowing you  just blew money over the same matter to make the infraction more equitable, but the chance of you walking out a winner is slim and none!

@Slocomb Reed, you can search numerous threads or Dodd Frank regulation, but what you will find can be summarized as followsDodd Frank Act, and administrative rulings by the Consumer Financial Protection Agency, are unbelievably numerous, hard to interpret, subject to subjective judgements, have harsh and draculon penalties for even small or inadvertent infractions, and cases are being pursued by trail attorneys both as individual cases and as part off class action.So, a lender set up to do a huge volume of personal mortgage loans may find the risk acceptable, the enormous investment in compliance and personnel  and procedures a cost of doing business.Private lenders do not have the time, money, staff or risk tolerance to be in this market. 

Just buy the ABNB share itself where it's priced pre-IPO, with the cash flow and revenue projection, the Airbnb valuation is so cheap and could provide a modest return in the future2. or invest in fractional home ownership where Airbnb is offered, like arrived/Bezos home is still offering 5% cap Airbnb with money as little as $100.I did all three myself (own STVR,owned fractional sTVR and willing to acquire ABNB shares with pre-public offering price lol).

It would be a shame to pay $219,000 for a rental and then have the neighbors have you shut down for a zoning infraction or violating a law against rooming houses (renting to unrelated adults).Mike

one could make a case against the E and O insurance for sure.. but I am not in the get an attorney camp for minor deal infractions and for me this is minor.. but for others it could be the end of the world..