If you’re going FHA, make sure the house you choose meets their property condition standards.

A termite inspector/company can help you assess the situation.Otherwise, check your lease for termination conditions and follow them if there isn't really a problem. 

Lawyers aren’t cheap, LLCs aren’t free, etc.

Also, I am working with a RE lawyer within the area and with proper documentation, he shouldn't be able to take a lien or sell the property.

Making money on the buy is an old saying, but it is really making equity on the buy.My final comment "Lastly is you make money on the buy not the sell." regardless of it's age will withstand the test of time for the simple reason that purchasing properly regardless of market conditions greatly enhances your odds of having equity.

I’m familiar with the previous owners and the condition of the home.

Be as picky as needed, given the conditions of your specific market.

What if the partner with the 300K debt is studying to be a doctor, lawyer or engineer and is expecting to land a big job at a big firm in the next 2 to 3 years. 

A few days later I got a call from a lawyer that works for the HOA saying that the previous owner had 3 of these townhouses and through a bankruptcy the tenant is told to pay rent to them.  

Find a local lawyer.