I have called 5 water companies in California and they all have said privacy laws prevent them from giving me the list.Is this true?

Not only can FHA be more out of pocket for the seller, but can be way more issues that prevent closing. 

Until the slow leaks cause $40k in damage and you realize particle board is not good in wet areas.You won't clean gutters or get proper downspouts that would've saved your basement from flooding.Do preventative maintenance and protective screening!

The first pillar is avoiding unnecessary and risky activities (don't drink and drive, insurance generally won’t cover your poor decisions) and take good care of your investments - these simple steps will help you prevent lawsuits before they even occur.

Any suggestions on getting rid of it or if he chooses to rent it out are there any laws or rules that would prevent him from renting out to people.

@Stacy Davis I believe the insurance institute also recommends original pin sol in flooded structures...to prevent mold as the wood dried out.

Current lease has restrictions that prevents subleasing without LL's written consent.As for who to sublease, he's thinking of his military friends who would stay for a short term (3 - 6 months) after which he's planning to replace them with others.I see a lot of posts here in BP where the current tenant wants to move out or terminate lease early in which case transferring or finding a replacement tenant makes sense.

Renting the property would help cover taxes, but won't prevent sister S trying to force the sale.

@Adnan M.What’s to prevent you from doing both?

When we made a visit after many years under their management, we found all sorts of issues that could have been prevented if the tenant had reported them earlier (rotting floors from leaky toilet, etc.)