Similar areas that have legal under utilized permitted space convert to max studios that you can fit.  

Seek qualified legal guidance

Your main concern should be whether these bedrooms and bathrooms on the lower level are legal and have the proper egress require for fire code and livability.

Even so, they were able to help at times when I had technical questions about the legal process.

If not, then you really need a strong legal structure stating how these properties will be governed going forward, including management, tenant selection, capital expenses, etc.

Since our legal billed were $36,000, we’re $100,000 ahead.  

I have legal background, billing, office and executive assistant type experience, and now many years of marketing experience as well.

If you care to learn about the distinctions, read these posts:https://www.biggerpockets.com/forums/517/topics/1215989-expl...https://www.biggerpockets.com/forums/51-tax-legal-issues-con...2.

.- The TL states that those are technically the team's leads and I will owe the 20% if they convert within the year since I was given training (which I was not), lender referal (which was forced on me by the TL even though I work with my own lenders for my clients).Is the above statement true/legal/valid?

Most are fine with that, but a few will have problems with it and claim there are legal issues, etc..