You need to own or control the lot or get approval from the owner to market a lot and house package especially if it’s going to be listed in the MLS.

You need to know who is lending on deals, and who is not, and you also need to know their underwriting criteria for approving the loan.

What were the terms and stipulations - Got pre-approved for this through my mortgage broker not a bank. 

They have not done a consolidation as they will not get approved and his father has a gambling problem. 

Im approved for a multi unit purchase.

That's not legal advice as I'm not a lawyer, but I think the situation is pretty clear cut.The issue I see is that your friends have already incurred these expenses without giving the landlord the ability to mitigate his losses, nor did they get approval for any of the costs beforehand.

One thing you can do is to check out the contractor's other ADU builds, you can see the quality as well as ask for permit and final approvals of those projects to verify.Good luck!

Getting approved for the loan might be the hardest part of this as a young person with little or no W2 history.

Sir this is using a VA loan, 2.8% pre-approved, 0 down, seller to pay costs. 

I do not have a lot of experience on the legal side and getting approved for a loan is almost impossible.