This is something I would like to avoid if possible due to the up front cost of going to litigation.

Unfortunately litigation is never recommended unless the property cost is worth it vs the impact.

Some will say this is a bad idea, but having an LLC does not make you invulnerable to litigation.

I cover mainly water and sewage since it's shared with other units.I am curious what you learned re: LA regulation - my understanding is that regulation is currently being proposed and litigated (like you said, requiring it to be a primary residence), but there is nothing currently in place.  

If this is for asset protection on buy and holds make sure you follow all the rules and don't co-mingle funds or your LLC may be pierced during litigation Also hire a CPA first to advise you on the right structure if you are doing flips or wholesaling a S-corp might be better tax wise

I may be new to the real estate industry, however that does not mean you are excluded from at least a modicum of civility and politeness. 

If they have any ownership during the construction process or have made any payments to the builder, they need to have a Builders Risk policy or be named on the Builders Risk policy their contractor purchased- Medical Payments coverage is a no-fault coverage used to pay medical bills for small claims to avoid them going to litigation.  

1)Researched crime data, median household incomes, population growth, school rankings, etc. 2)Inspection of both units/verified the age of HVAC systems3)Appraisal 4)Obtained a signed copy of the current lease for the tenant that I’m inheriting 5)Obtained a copy of the cleared rent check, verifying the amount they’re paying6)Received an estoppel signed by the tenant and landlord, detailing the terms of the lease/rent amount7)Received State of Connecticut, Dept. of Consumer Protection Residential Property Condition Disclosure Report8)Verified property tax with the town9)Checked civil court/housing court records for any cases involving the current landlords/tenants and checked for any cases linked to the property address itself10)Obtained the water bill for better estimates of utility payments 11)Purchased insurance (HO-5) and added $1M liability coverage12)Had contractors come to the property to give renovation/repair estimates13)Researched current comparable rents in the area and received rental comps from the realtor14)Sat down and spoke with the current tenant to find out her plans going forward and learn about any complaints that she has about the property/current landlord 15)Addendum to P&S that seller cannot have the current tenant sign a new lease prior to closing; must remain month-to-month 16)Sat down and spoke to my former landlords (who I really respect and enjoyed renting from) and colleagues who are landlords to hear about their experiences 17)Went through all the forms that came with the Book on Managing Rental Properties and made them specific to my property and Connecticut (notice to vacate, rent increase, application, move-in checklist, late rent notice, employment verification, etc.)18)Met with a lawyer and had him review my lease, application and other forms19)Met with an accountant to discuss tax strategy 20)Created a profit/loss statement and spreadsheet for tracking expenses 21)Went to the local police department and received an in-house CAD report of all calls (emergency and routine) for the street and the specific address22)Met with the tenant’s Housing Choice Voucher caseworker 23)Received a copy of the “passed” HCV annual inspection 24)Submitted all paperwork to the Housing Authority 25)Scheduled contractors to begin work the day after closing26)Contacted the utility companies to transfer service into my name27)Set up a separate checking account for property income/expenses28)Set up a separate savings account for the security deposit 

There's nothing like an existing lien on a property that makes it more unattractive to litigation. 

Normally I'd recommend against litigation or anything that involves our legal processes, but you've a simple case from the sound of it.