I would also have them investigate whether your title insurance covers this type of situation OR if the prior owner added this second unit illegally and you were given a Special Warranty deed then the prior owner could also be liable to you for this issue as well.

For example, if you were to investigate the party you mention, simply stating that they received child support is quite different than having a copy of a court order that awards those payments, PLUS evidence of those monthly payments such as a year's worth of bank statements showing the deposits to the applicants account.

Raquel,The answer to your question may not be cut and dry.You may want to investigate whether or not the wiring was, as it was installed, code compliant. 

Our mortgage broker "forgot" to mention closing cost (our bad for not doing thorough enough investigating and researh, AND now trust is a bit fractured) - I'm wondering (I've gotten 5 calls this morning from mortgage companies) should I have shopped around more? 

Just make sure you do your homework, investigate the location, and have a great property management plan in place.

I will investigate this as I do need/want to mitigate my risks.

When these get investigated, the SEC filings unaudited and inaccurate will change regulation.  

You can also use bank deposits if you are inclined to put more work in investigating.

Think I need to do little more investigating on this one.

Look at Section 16.24.400 and especially paragraph E that specifies the bedroom size required depending on the number of occupants of the bedroom. https://library.municode.com/tn/metro_government_of_nashvill...With these regulations in hand your municipal code enforcement can keep 7 families from living in a 3 bedroom home unless the bedrooms are absolutely ENORMOUS but you need to report them and keep on code enforcement to investigate.