My lease states tenants are not permitted to 'fix' anything and shld follow the procedures on getting things fixed.  

The evictions could get messy and you'll want to know the procedures in advance.Good luck!!

All of that said, yes, there is a decent risk that the T12 has been "massaged" but that's likely always the case so you can discount accordingly.

Is this an acceptable procedure?

real estate related / a financial statement I can provide to a bank when they require one in order to provide me with a loan Every bank will have their set of procedures in calculating your DTI ratio.

It's about processes , procedures and systems.  

My husband and I have decided we want to try to work through the city's procedure to legalize the in-law unit.

You probably won't cross all the i's and dot all the t's with your processes and procedures, you may have paperwork that would raise eyebrows at the IRS, but you stay alive - nothing else matters without that.

A M2M lease is most beneficial to a landlord.When a inherited tenant is on a term lease it is no different except the new lease is offered a month prior to the end of the term and again should be a M2M.Landlords should know and understand all state landlord tenant regulations to insure they are following all proper procedures and timing of lease notifications.

Well MA is not a place that is all that fast on the trigger to remove tenants even when everything goes smoothly.If you have not done it and are starting off blind and are buying a place with existing tenants so you aren't even executing an action based on your own lease (so god only knows what provisions are in there they can argue give them cause to not pay) I'd get an experienced attorney to handle it.Won't be cheap but should be a lot less likely to have issues, which can reset the clock from whenever a procedural mistake was made.