We now are looking to create an LLC and setup the necessary legal documents to protect both parties and layout the terms of the agreement.

Lets say your accountant tries to write off as much as is legally possible when it comes to lowing your taxible income so that your tax burden is less and you pay less taxes.

The zoning compliance must either be legal, legal non-conforming or locations with no zoning.

You also need to register AirBNB units with the city, which means you can't legally do an AirBNB with a non-conforming unit. 

If they fail to pay the taxes, plus fees and interest, within that time, then the property legally becomes yours.

The two deals with friends both ended poorly with friendships ruined and tens of thousands in legal fees and court costs.

At that time we could renovate the ground floor apartment and potentially turn it into (2) apartments for a total of (5).My questions come down to how do we deal with the existing 40k mortgage, whether we can make it work so her parents aren't paying much in rent, if anything at all, and whether or not we set up any legal entity, like a trust to help the legal situation of paying off her sister down the road. 

The Yale Law Journal article, "Zoned Out: How Zoning Law Undermines Family Law’s Functional Turn," highlights this issue, noting that while family law has evolved to recognize diverse family structures, zoning laws have lagged behind, potentially hindering innovative housing solutions like co-living.Challenges for Co-Living InvestorsFor real estate investors interested in co-living, these restrictive definitions can lead to:Legal Barriers: Difficulty obtaining permits or approvals for co-living spaces due to non-compliance with traditional family definitions in zoning codes.Operational Challenges: Potential fines or legal disputes arising from housing arrangements that don't conform to local zoning definitions of a household.Market Limitations: Reduced ability to meet the growing demand for affordable, shared housing solutions.Advocacy for ReformThe Bloomberg article, "Why Are Zoning Laws Defining What Constitutes a Family?"

Lead-Safe (in Philadelphia) is defined as a unit being identified to have positive lead-paint components within the unit; however, if the wipe samples come back below the legal limit, the unit is determined safe for their occupants.

Interesting, since when did it become HRs problem (or legal right) to determine that "he is supposed to have found housing already".