I have heard they protect their own.Nar is not where you go with this.. this to me if you have a case is a civil matter with a civil suite being filed..

I check their name manually to see if there were any local civil lawsuits against this person and evictions. 

Will this open us up to litigation if a tenant wants to sue in the future?

It might not survive a motion for summary judgment, but thats after a lot of litigation and discovery.

They certainly could attempt to challenge it - we have a very litigous society - but at least I know the money is in my account if I need it.

If it were me I'd call my civil engineer for advice/pricing to subdivide.

If I were to redact the first sentence of your post, most readers would assume you are preparing for litigation with a healthy amount of discovery.

The split would leave road frontage adequate and side to side requirements met. 1. talk to the jurisdiction's engineering / public works dept - they will tell you the necessary steps to complete the work in your community. 2. you'll likely need to hire a surveyor &/or civil engineer for the plans pending the exact requirements in #1 above 3.

In CA be sure you read civil code 1695.

Insurance does not cover civil suits and wanting to try to segregate each property from liabilities of the others as easily and with the least ongoing expense and hassle is the idea.