HML said an alternative is to change operating agreement to show >80% equity by primary borrower.To me, running credit on all the partners is the obvious solution before changing the operating agreement.

Utility companies normally let tenants get pretty far behind before the landlord is notified- if the utility company puts a lien on the property for unpaid bills, it is better to have closer control over the bills- If there is a water leak or other problem with the property, the tenant doesn't have to bear the costDisadvantages of having utilties in owner names:- If tenants start using a lot more water/power, it is more difficult to quickly adjust rent or get them to conserve- with pandemic or other freezes on rent or evictions, there is no recourse for utility increases- if the tenant qualifies for low income utility pricing, it has to be in their nameOnce you decide what your guiding principle is, you can align your current rental agreement to match.

Something has to be written into the rental agreement I would assume. 

Another thing I look at is the type of lease agreements.

They made a side agreement where he, the property manager, is in one of the units and his rent is only $200.

And make sure you have the relevant bank account statements/preapproval and operating agreement if applicable for submitting offers, as many seller entities may require additional documents for offer acceptance, purchase or re-fi.

I know this is done with an estoppel agreement. 

Lender/underwriters will allow you to use 75% of the rental income to qualify (ie. if you have $1,000 in proposed monthly rent (or signed lease agreement) the lender will allow $750 as qualifying income on the proposed property).

I have a basic lease agreement with no force majeur. the house is only 500 sq ft so most likely have to move out. 2.

Since it was a friend agreement I used his insurance vendor and lease agreement - would definitely do my own homework first.