So, all the water from the shower had been dropping straight from the hole in the shower pan onto the slab and void space around the PVC drain pipe directly beneath the shower.The crazy thing was that there was absolutely zero damage (or evidence of concealed damage) that would indicate that this was an issue.

Let's assume, against massive evidence to the contrary, that your partnership with your brother will be problem-free.

A legal action may occur months down the line requiring you to find evidence months in the past, etc. etc. 

I have suspicions, but little in the way of solid evidence.

You'll likely need to leave some equity in this deal, unless your appraisal comes in higher than expected (and there's no evidence to suggest that). 

To a wise person, it's self-evident...

It will become evident what fits your boat :) If you have any questions, just ask!

But I haven't yet found evidence of a purchase, nor of new property lines.Now, if the property encroached upon has changed hands since the encroachment and the encroachment was not disclosed to the buyer, that buyer may have recourse against the previous owner or a claim against the title insurance policy.And that is exactly my concern!

When I go to the bank, I show them receipt of these payments as evidence that I am able to make regular payments. 

A pre-printed letter can be used from the borrower to the lender.At this point, the lender made the mention of the alternative and the borrower has elected to take that alternative and the borrower is requesting the alternative as a solution to be considered by the lender.Now, the lender should show evidence of due diligence (title search) of the collateral and find if the acceptance of any deed would be acceptable.