What steps does my mother need to take in order to transfer the money to us?

You'll need to work with a lender who is a servicer, not just an originator because once the purchase transaction closes, the reno budget gets transferred into an escrow account and you need your lender to be able to access it so you can quickly begin working on the reno or you will have problems with your contractor out the gate. 

You can offer to have it transferred to you completely so he's out of the picture.

On your end just lawyer and title company.If your state has a transfer tax, you'll get hit with that when you sell to your daughter.My other idea is that you could buy with cash and put both your names on title.

E-mail and hard copy.

RISK OF LOSS:If subject property is damaged prior to transfer of title (any, Buyer has the option of accepting any insurance proceeds with title to the property in “as is” condition, or of canceling this contract and accepting the return of the deposit.

If that’s the case great - Now if I’m going to keep financing the note whats the best set up for that I have heard I can transfer it to an LLC under my name and ask them to buy the insurance under their name but to put the LLC as the a deed owner which need to get paid off in case there’s claim - If this works out I could hang on to tjis and just let them finish paying for the house the remainder 18 years -S~

Freddie/Fanny do not allow for LLC Financing so that's a non-issue for those types of traditional loans.Other types of loans might allow you to transfer out of your name and into the LLC but it needs to be on all the paperwork and contracts from the very beginning that shows both you and your designated entity. 

I'm currently struggling and thinking that instead of me just transferring over the payment to the buyer, i'd instead have to pay off this whole 48k in order for them to get the funding to purchase this house.My first thought was (well i'll sell to someone else then), but upon some further research i discovered that all FHA loans will not lend to a buyer looking to purchase a home with a PACE loan on it. is this true?

Report the property as multiple schedule E entries in TurboTax, unit 1 where you lived part of the year and then unit 2 or 2/3/4 for the 100% rented part.