She won settlement in December 2015, but due to all the medical bills and just bills in general she went in debt(ruined her credit which is why she wants to have the application under her son).

In CA, you're allowed to charge a reasonable hourly rate.It would be perfectly acceptable for you to write up a "settlement" agreement with her.  

If they are willing to accept that settlement then keep half.  

If a lawyer was involved, it should of been checked by the lawyer to see if there was one and accounted for in the closing settlement paperwork (usually just the sec dep, not the interest (unless your lawyer was better than average)). 

A SFR is way less risky than that.3) my REI who have around 1,000 units carry between $3M-$5M limits.  4) I personally insure 7,000-8,000 units , with the largest settlement to date being $50,000.Hope this helps reduce your fears of reduce your fears of owning some rental properties.

She then calls me back and says she has one year rent up front from a settlement she received.

You could try to negotiate a settlement or a payment plan with the utility, if that would help with cash flow, otherwise you'll be the only one with a collection!

A couple things missing in this transaction:- Estoppel letters- Title company should have handled the security deposit transfer on the settlement statement- Title company should have handled the pro-rated rents on the settlement statement.It's much easier to work on these things BEFORE you close then after.

Our settlement attorney is going to the Court House tomorrow to confirm whether the prior owner received proper notification of upset sale.

I told the Tenant about a company that specializes in cleaning up bad credit and a lot of times they could do a settlement with the company they owe to.