I don't have experience with HML but it seems like it's often utilized in these scenarios based on what I read here.

I use Rental Research but there is a lot of red tape to this now. 

A bit long winded I know - but thanks for reading my thoughts.

One way or another the city is going to know EXACTLY how much water has been used since they last read the meter before turning it off previously. 

The owner did not know why the number 2 lumber was not as good as the number 1, did not know how to even read an engineering drawing to see what was to be built. 

I would buy the property from someone other than the person that will be managing it.I recommend you start by reading Long-Distance Real Estate Investing by @David Greene before jumping in.

Typically its no Issue untIl you have to do an evictIon or when cIty fInds out.https://www.citybuildingowners.com/rules-for-new-york-city-basement-rentals/Read the article should have the details you are looking for..

Still studying deals, reading what I can and listening to podcast.

Read your contract.....get an attorney’s help if you think you need it.What exactly are the “defective works behind the drywall”?  

I'll definitely check with the city on the items you mentioned and report back.Some additional questions I have after reading your response and thinking about this a bit.1.