This would be if you've reached out to Corporate Housing by Owner, AYA, Vivian, anyone that caters to insurance claims?

you said he is insured, i guess you are talking to the $10k ish bond only, you could file a claim for what you spent for him not pulling a permit, it is his responsibility to know if a permit is in need or not.

Your desire to avoid a few pennies in taxes makes for a very convoluted description of the proposed transaction.

In my research, im finding the watch out is that if we do a quick claim deed, the note could be called due in full.

In this example, would Person A forgo a claim to any profits until they are above 5%?

The amount the bank is claiming is listed in the filed paperwork along with how the interest accrues so you should be able to accurately track the payoff amount as time goes on. 

As its been posted, apparently CA will charge you $800 annually for each LLC, no matter where it is..The next is tax time... 

I am wondering if there is a data service that addresses my needs as someone seeking to buy vacant lands at tax deed sales.

My other concern is that he is claiming this to 1-stay in the house somehow or 2- withhold rent.

They should be able to provide you with instructions for creating a Quit Claim Deed, transferring the property from one entity to another.