Does this always take place, the seller receiving a 1099 and needing to claim this as income?

Assuming you are a major city in N CA there will be regular meetings.

Take your the loss and claim in on your taxes.

(I get another 10% that tell me everything should be fine and the report shows they have lots of problems in their past-that they claim they didn't know about).

When she and her two housemates moved in, there was furniture already present (the place was rented unfurnished), left by the previous tenants.The landlord is now refusing to return the deposit, claiming that the cost of moving out the furniture (which was present when they moved in, and they left when they moved out) exceeds the amount of the deposit ($1550).

They make stuff up and claim it is the law.

The title insurance would protect you against other claims on the property, but you should either get a title report from the title company or look it up yourself.

Here in Calif, you would file a mechanic's lien with the county, however without a written/signed contract there's virtually nothing to substantiate the claim.

Since the apartment was on my name, the apartment building claimed they required 3 months notice, etc,etc and took it to court, indicating i owe them those months rent because of the late notice.

Josh, I am sure there are a lot of people like myself who may not post frequently, but do read the posts regularly--keeping your server very busy.