My plan was to use the condo heloc as the down payment for the duplex, and then sell the condo and the proceeds would pay off the heloc. 

The seller has countered with the following conditions:- Loan to value (LTV): 80%- Earnest money held by seller's recommended property management company- Final inspection within 1 day of closing- Commission paid by to buyer's agent is 2% of final sales price.I'm seeking advice on how to proceed, as I have some concerns:- Why would the seller request an 80% LTV?

Your response was not helpful and only serves as a blight attempt to bash others. 

As you were asking about news articles I cited, while the Porter Case ones are not available, the one about another scam involving sub-2's Foreclosure Scam           Joe Kaiser, a license realtor would in many cases acquire properties under sub-2, let it go to foreclosure, then pocket proceeds from the foreclosure sale where the lender had to refund proceeds above the unpaid mortgages to the owner of record.

As for the "Lazy 1031 exchange" reference, a true 1031 exchange allows you to defer capital gains taxes by reinvesting proceeds from the sale into another similar property, but that doesn’t seem to apply here since you're looking at using a passive loss instead of a like-kind exchange.

(Yes, I know why.)The condo has now had foreclosure proceedings started.

My mom has poor credit and about $30k in revolving debt, so it would be difficult for her to qualify alone.We would both prefer to hold the property, but the risk of tight cash reserves is concerning, especially if the rehab costs exceed our budget.Legal ConsiderationsIf we decide to proceed, we’re also weighing how to best structure this deal:LLC and DSCR: Would it be better to put both of us into an LLC and use it to apply for a DSCR loan?

How are proceeds shared? 

But under the law the company shouldn't have marketed the investment to you in the first place and certainly not proceeded with you after learning you aren't accredited. 

I sold some properties, paid off those mortgages and took all the excess proceeds and applied it to other mortgages.