These include various state and federal disclosures, 1003, personal guarantee, a use of funds statement, and a few others.

If you are definitely refinancing within the 7 yrs.with no prepayment penalty, the ARM is the way to go- but make sure you read every disclosure very carefully.

If you can't prove that the ADU existed as living space prior to 2001, you can apply through the Board of Adjustment (full disclosure: I am a board member), for either a variance or a special exception to allow the ADU. 

In fact the two rules that apply, subject to state usury, are for 1.5% (covered or QM loan) and 3.5% (not covered or non QM loan) - which exceeding those thresholds results in defined as "High Priced Transaction" - used to be known as "Section 32 Loan" and requires additional disclosure and right of rescission.  

I also realize I would need to disclose having a license to sellers, and having a written disclosure that I am not representing their interests and not trying to get them "highest and best".

Disclosure is key.

Full disclosure we specialize in long-term buy-and-hold, not short term.

@Andrew AngellI would absolutely have an attorney read the fine print as some of the ones I have seen (not full disclosure I run a mortgage note fund so they are competition) actually have the loan non-recourse and have multiple loans against a property.

Full disclosure, I'm not the one that handles this for our real estate investment arm, but we use Simply Safe and its saved our bacon a handful of times with squatting attempts.

I'm reading an Addendum to the Purchase and Sale Agreement for a wholesale deal and I came across this item in the contract:Mineral Rights Disclosure: Seller reserves all existing mineral rights to the Property.