If you continue down the path of free rent, I would do a personal contract with her about the rules and expectations to continue earning the free rent, including respecting the house and neighbors. 

As an investor that was around during the 2007 meltdown, there were a lot of investors that lost their shirt when their mortgages shifted from interest only to including principal and interest.

The assessed value includes the building, land and building components.

Hey @Nancy Chawla - so this scenario is leaving out a couple of important pieces that you may not have considered. 

I think the LLC is the thing in there that's important.

It will be used for damages, including the ones they've already done, and damages that exceed the deposit amount will be billed to them.  

.  :-)Best wishes to you as you make this important decision!

If one believes everything somebody (including professionals) or something tells you, you're in trouble.

These activities include shopping for mortgage, communication with lenders, going to open houses, doing comps for putting in an offer, analysing disclosures, and closing activities.

Getting a hold of that document would be important for understanding your rights, and 1sts generally prefer to be bought out rather than going to foreclosure.