From the report, I saw: owner will pay$1530 for Bait Defend System Trelona, and $2560 Related Repair

I would get an attorney involved to give an opinion on ownership as well as a tax attorney and see their thoughts about defending an audit. 

They cannot get the property that is owned by the trust, only the property of the defendant.

You need to get an attorney involved ASAP.Look for someone through the Mass Bar Association who has a track record in defending these kinds of cases. https://www.massbar.org/public/lawyer-referral-ser...My understanding is the same as yours - if a property is not inspected and approved by the local housing administration (the local authority that administers Section 8), then Section 8 renters are not able to rent there.It's just a guess, but if your PM said something like "we don't rent to section 8", that could be the basis of the complaint. 

This keeps the LLC compliant with state law for conducting business in the state and grants the LLC standing with courts of the state to pursue or defend legal actions.The question would be "does the activity create a business nexus with the state"?

What if you're ever a defendant in a lawsuit?

Not sure how management company or HOA board can defend themselves on this.Thanks.Terry

I can't believe I'm going to defend Zillow here...

But at the same time, I will not be publicly judged and not defend our decision.

If you do truly have a non recourse provision in your note (in rem) you have no need to counter sue, just defend the suit, to some degree, making sure any judgment excludes any deficiency judgment language.