He tried explaining it to me but confused me.Now my loan is falling though because they wont use that income and underwriters will not even look a the settlement sheet for poof that it is a glitch in the system... underwriter said to refile taxes and amend the return but loan is denied because of this and THIS HAPPENED 1 DAY BEFORE CLOSING after title work and appraisal is done.

If you did not exclude gain for selling a home on your tax returns for the previous two years (and you do not intend to do so on any returns or amended returns for the past two years that are not yet filed), you meet the look-back requirement.

I only had to amend 4 years worth of returns after I went through mine with a pro the first time...humbling.Good luck!

Originally these were amendities to the purchasers of the of the condo's .One year latter and the marina is almost at capacity and the PGA golf course has doubled its membership to non resident golfers .

Even so, you were smart to record the contract or an amendment of same as it forces the seller to deal with you in order to clear title. 

If you didn't you may want/need to amend that return and claim the depreciation for that year.

How could I amend the Note 1 so that It becomes a cross collateral note secured by property 1 and property 2 ?  

If you already filed your 2020 return, then file a 1040-X amended return and attach this statement, also before Oct 15th.After Oct 15th, the only option is to carry it 5 years back.

The two options that he provided me with were either getting the business taxes amended to not declare a loss, or to utilize as bank statement loan that would require 20% down, which is unrealistic for both of us financially.

If they don't abide by the lease, or come to some agreement with you to amend that contract, you'll need to start an eviction process to formally terminate the end of the contract.