What's this I've been reading lately about a pause in distributions and capital calls?

I have been renting my townhome up in Issaquah, WA for the last 10 years with no issues.

We have had some issues with getting insurance for the Florida properties in the LLC and also related issue with the Mortgage (which is in our name).When our lawyer requested EINs for the LLCs we were informed by the IRS that we need to file a 1065 for each of the LLCs.Our structure is that the LLCs are owned by the two Trusts (50%) in each of our names.

In conducting a background check, I learn the applicant's current neighbors hate him, he's on a first name basis with the local police or he has a variety of other social/criminal issues chasing him.4.

(i) The term "Insured" also includes(A) successors to the Title of the Insured by operation of law as distinguished from purchase, including heirs,devisees, survivors, personal representatives, or next of kin;(B) successors to an Insured by dissolution, merger, consolidation, distribution, or reorganization;(C) successors to an Insured by its conversion to another kind of Entity;(D) a grantee of an Insured under a deed delivered without payment of actual valuable considerationconveying the Title(1) if the stock, shares, memberships, or other equity interests of the grantee are wholly-owned by thenamed Insured,(2) if the grantee wholly owns the named Insured,(3) if the grantee is wholly-owned by an affiliated Entity of the named Insured, provided the affiliatedEntity and the named Insured are both wholly-owned by the same person or Entity, or(4) if the grantee is a trustee or beneficiary of a trust created by a written instrument established by theInsured named in Schedule A for estate planning purposes.

Not an eligibility issue so much as who is able to take it on.  

Your property sounds to be more unique, therefor likely making it challenging to find acceptable comps. if the property is common for the area, it's likely this could be a non-issue with the right lender. 

Have them pay for it and tell them you will reimburse them if there is a structural issue to the exterior sewer line. 

Credit score shouldn't be an issue.

This may be a case where you are trying to force the issue by wanting to complete a flip transaction where your market is telling you its not the right time.