I'm 1099 realtor now, so no consistent income and I have kissed my 2-year work history in medical goodbye, DTI is terrible because of mortgage and inconsistent income.

I just do everything to minimize any chance of someone making this claim. 

Or Errors & Omission claims kicking in post sale OR as a way to get earnest money back?

I've made about 10 insurance claims over the years, totaling over $1.5M in payouts.There is no downside in starting a claim, which you can always drop later. 

I'm anxious to see how well the planned redevelopment of land near the medical center into small houses will do. 

However, since you're aware of the debt, and even if you weren't, if you didn't pay fair market value for the property, a creditor might claim the conveyance was intended to be a fraud on them, hiding an asset that could be used to satisfy the debt. 

She and her husband are single family investors that have successfully used their VA loan and would be great resources to help you claim your first deal.

The lady have added the mother-in-law as co-applicant and claiming that she will be living with them.

In order to just sell yours you would need to go through an equitable division and probably craft corrective quit claim deeds showing your 51% interest as a specific amount of units.   

If something were to go wrong, it would be on the contractor to file the insurance claim.