Second biggest mistake is failing to realize these construction loans allow draws on improvements meaning cash expenditures are required before the first draw can be issued.

I have been to the US Court of Appeals though, litigating some of these issues and won.

If the drywall cracks in the next year or two, or the doors start to stick, then you likely have a larger settlement issue going on, and will likely need to call a foundation repair contractor. 

A way around the whole issue is something we occasionally consider.  

And also that rates are just going to continue to be an issue, so it's likely something to plan for in rent rates and/or overall investment costs. 

When he had to take a step back for health issues from what I understand the company seemed to go a bit sideways. 

I understand this is not a requirement, but I have never received a damaged unit from an inherited tenant or any legal issues.

I'm not sure I would get to cute trying to squeeze every time out of it now with a lease that might cause you issues in the future, but the scenario you describe is common and probably smart. 

However, if you clearly communicated a $15K budget, I’d stick to that and ask them to discuss the overages with the contractor to find a resolution.As a side note, always try to maintain reserves for your properties.

Since Landlords are going to be monitored even more now with the price gouging issues surrounding the fires in LA, I would be extra cautious.