The vast majority of lawsuits against Landlords are for wrongful eviction, security deposit disputes, and Fair Housing Violations.

I know there's seller finance and "B" lender that are good for the short term, but if a balloon payment is due say in 5 years, there's no guarantee that my DTI would be in a better place then I'd be stuck without funding. 

Your son is responsible for making payments on time or ruining this seller's credit. 

Sellers tend to like to finance because it gives them control over when, and how much capital gains flow in and when and how much the balloon payment will be.

Take the payment in 2 or 3payments.

Unless you've done substantial improvements to the building or used a large down payment when buying, it's unlikely this will work.Perhaps your best move is to find a new primary residence that is 2-4 units and repeat the process.

I financed this property using down payment funds from 403B and a local commercial bank. 15% down from personal funds. 85% down from community commercial bank. 3yr balloon, 20yr amortization, 7% interest rate.

Do they require payment on site or do they give you a certain number of days to close the transaction?

However, finding properties that would cash flow with a 20-25% down payment on 400k property has been challenging.

Be aware if their payment is clearly labeled "for rent only" or similar, and in that case, only apply it to rent.