Yes, you can work on a subdivision, especially if you let the seller/lender know your intent, since some jurisdictions require that the lender of record sign the map before it gets recorded.

if a brand new investor is working with a private money lender, it's almost like one party is taking advantage of the other (not saying it's intentional)

If you're really intent on keeping the resident in place then I would just have a conversation with the manager and see what can be worked out, but if they're sticking to their agreement they signed with you, than you might have some decisions to make. 

My cost to operate using their current expenditures (which I have intentions to reduce) would be at $400,000 conservatively. 

That might lower your taxes.Look at what you are really getting for your insurance premium with regard to your intent to use it.

If memory servers me the key word is intent.

(No intention to single this dude out, but it's the most recent one I've seen.)

It would probably be months before the gears that have to turn within the IRS bureaucracy got to filing something like that - unless those gears have already ‘turned’ and you have been given notice of the intent to levy your property.  

So simply with that fact, you won't be likely to prove someone had the intention of hiding a latent defect.Additionally, you did an inspection but didn't do a sewer scope.

I've crafted terms that are a win for me and for my buyer, but my intention is to hold the deed of the property until the buyers's note to me is paid in full, exactly as the banks do.