Have a civil conversation with her and make your decision from there!

Any pending litigation or evictions?

And if it did, then the new title insurance policy would litigate or pay to rectify the situation.

I know it isn't in Civil Engineering or Real Estate Investing.  

In litigation, the opposing side will argue that by virtue of your license you were more knowledgeable than their novice client and you used that knowledge to take advantage of them. 

The broker's settlement may or may not protect you, depending on the language used in the settlement, they may use words that waive all future rights to additional litigation, or they might leave it wide open, which makes you vulnerable!

Let the civil servants in your area do their jobs. 

You can also go to jail for buying a house under Civil Code Section 1695 et seq. - Home Equity Purchasing.

I just sold a 1850 house that had new 200 amp service, new gas furnace, new gas hot water heater, new kitchen gutted to the studs, 2.5 baths, newly refinished hardwood floors and other updates.From the outside it looked the same as it did before the rehab.We've had other houses, one of which Civil War Soldiers marched by, and old is not necessarily bad. 

There is a litigation period of 1 year where it is recommended that you don't sell or rehab for one year in case of an erroneous sale and after that you are clear sailing.