I think their best bet would be to find a way to combine that unused space into one of the current units.  

Each State may have different requirements on deposits into accounts bearing interest, so be sure to verify.Use your accounting system to track rents due vs rents paiddeposits paid vs deposits heldWith Quickbooks, use the CLASS feature to track physical property and your reports will nicely snapshot your tenants

and if you physically fly out to the location, at what point do you fly out - to look at homes?

If the house is over 40 years old ( and I'll bet it is) there could be a lead paint issue.

It generally isn't contingent upon a physical policy being issued.

Depending on the location and whats actually on the land i bet you could lease that out to hunters..Guys pay good money to have access to private land. 

You will not find a way around liability outside of physically preventing their use.

The owner can't get help from state since he has this asset; daughter can't afford or physically deal with this whole scenario.

Much less an overly reduced rent.... for manual physical labor after surgery.

You'll find everything you need and I bet the results will surprise you!