I read in the local papers of this controversy, as recently as this year, about zombie homes, where the foreclosing bank would not record change of ownership because they don't want to be responsible for liabilities as legal owners of the property such as slips and falls, squatters being injured.

Will this be largely non-compliant and open us up to liability?

As an investor, what is my level of responsibility and/or possible liability into determining if the improvements to the house, done prior to my purchase, were done under a permit?

Just make sure with each flip that you have the proper liability insurance and property insurance and you should be good.

If your have a large equity position in your property, your more likely to get through a market correction but (some say) it opens you up to liability.

Insurance -- landlord fire/liability policy @ replacement value (minus land value) is correct, as @Morgan Klein mentioned.Umbrella policies absolutely do have value; however to me 2 other aspects are equally important.1. 

That is bad debt because it’s a liability not an asset .

While the member making a personal guaranty has no corporate veil protection for the mortgage they, and the other members, would for any other liabilities of the LLC. 

@Damon PorterStructuring the business will depend on several factors including tax liability and asset protection. 

Personally I prefer deferring tax advice to tax professionals and focusing my time on the liability side.