This is an ideal way to have extra liability protection and manage partners holding assets in other cells.

However it will turn off some buyers who have safety, maintenance and/or liability concerns. 

I mentioned I was not comfortable with the liability situation that puts us in as well as the CC&R's for our development that prohibit property owners from having businesses where people would be coming and going regularly.

If there is any liability it's minimal, as they are inspecting and not certifying the property.There could be natural springs and if so I can understand why the buyers would back out.You might need a soil scientist to look at it and if he/she agrees with the inspector than see what the solution is. 

That said, the liability of knowing about the presence of asbestos in the living area or HVAC system (ie in plaster or floor tiles, duct wrap/mastic), but not disclosing it could come back to bite you if something ever did occur.Much of our building stock is old here in the east - 1920s-1930s would be newer buildings in some neighbourhoods.  

. $1-2M of liability is relatively cheap.

Any real world examples of where you actually lost a law suit in an amount greater than your liability insurance?

I think an LLC is a good idea in that it can protect you to from some liability short of gross negligence.  

If you are just looking for limited liability, most of that can be covered with really good insurance. 

Plus I can self manage it all, and keep things streamlined and lessen my liabilities long term.