I totally understand wanting to protect your assets.

Protect your $30k like a mother bear

-What do need to do to protect ourselves in the case she does not pay-up?  

Short answer: I would decide your strategy and expertise.

Data Protection Again, chattel lenders are very small in relation to mortgage operators.

I suppose if you were looking to abscond with the money of your friends, you could create an LLC, pay yourself an exorbitant salary and then fold up the tent when the investor funds run out ;)  Since you probably don't want to do that, just put together a good agreement that protects everyone.

Google the "tenants in foreclosure protection" as gar as CA state laws.  

PMI reimburses the lender if the borrower defaults on the mortgage so it protects the lender.

Best to consult an accountant with cross border real estate and business expertise to get a full understanding of how you should hold (own) any Canadian properties to best fit your situation and mitigate tax liabilities.DispositionAs a non-resident, when you sell a property, you must notify the Canadian Revenue Agency (CRA) pretty much immediately (something like 7-10 days if memory serves) to obtain a certificate of compliance.  

Protect your investment and fix the water and foundation problems.