If you assume the tenant is not lying and want to mitigate your loses  tell him that legally a security deposit can not be used for rent and LMR can legally only be used for the last month of a lease. 

We ended mitigation with a scheduled status update hearing date (to see if we resolved the claim out of court as the seller rep wanted to talk to the seller) and, simultaneously, and a scheduled hearing date (just in case we couldn't come to a resolution at some point).

Saving up reserves of operating expenses prior to purchasing anything would mitigate the impact of a vacancy.   

In your experience is there anything on our end we can do going into the refinance process to mitigate this issue?

Holding assets in separate legal entities is one way to mitigate the risk.

I am still learning about solicitation of funds and I want to be on the right side of the law.Setup: Each deal will be structured based on the deal and what makes sense, but the general focus will be the following.LLC with myself (Sponsor) as the General Partner.Investors are passive members.1% Sponsor Acquisition Fee, negotiable with investors.Preferred returns of 6% of investment, paid monthly, with 4% bonus at end of year.11-16% CoC returns to be paid as 35/65 split, heavy towards the investors.17% or greater on CoC is paid directly to the Sponsor, as incentive to manage the asset well.Financing:Debt risk is mitigated to the lenders and are compensated by interest rates.Sponsor may also provide a guarantee for the loan.Investment:Investors provide required capital for down payments and repairs if required.

Find out her concerns and work to mitigate them. 

if it was me, I would ask about the structure. if it's structurally sound, just figure in cost to mitigate any termites and continue with the deal.

Continue to refine loss mitigation strategy and portfolio analysis/management.5.)

Did you follow your local rules for snow removal and take steps to mitigate your risk?