If the tenant told you about it before the incident, it should have been fixed. 

Has anyone experience an incident where your tenants lied about the amount of people that would occupy your rental on the lease? 

The building is only 4 year old and there are multiple incidents of water leakage as discovered from the Minutes of meetings of the board.Would really appreciate for guidance of the experienced members of BP on the following:- Whether to proceed with the deal?

If an incident occurred and police needed footage, of course I would cooperate.  

That said, I had a far worse incident with a similar neighbor before in a different house and they ended up getting busted with a stolen car courtesy of my 911 call.

I made it part of the purchase agreement and held a hefty deposit in escrow. they moved out without incident.

In the event of an incident and say, the tenant attempts to sue the LLC.....aren't ALL properties you have in the LLC then at risk (since you have anywhere from 1-5 properties that a judge can use as collateral), as opposed to having the risk limited to a single property?

Fortunately with good screening this type of incident is rare.

Otherwise, perhaps there are structures designed to protect unrelated properties in the LLC from being targeted by a lawsuit stemming from an incident in just one of the properties. 

I have noticed a high incidence of mental health issues with c and d class tenants .