I would contact the relevant county court (Kings if Brooklyn, New York if Manhattan, etc.) and ensure you serve the proper notice and such.

It's just not going to function quite as an MHP would but still having knowledge in that space will allow you to determine if this would be profitable.Not buying just because you're afraid of having park owned homes is a bad idea.

that the main concerns would be structurally- assuring this is indeed a fully functioning third unit  that complies with any local zoning that would possibly apply. 

Either way, this wasn't handled properly a year ago.

So find the value of their investment, and value of management, and value of finding the deal, etc and break it down into percentage of value to find proper shares, or if they want total passive, just borrow off them at a reasonable interest with balloon clause and keep the deal myself.

Yes I would definitely sell and re-invest in a cash flow positive property, and make sure you understand how to properly calculate cash flow and even add some margins in there for higher interest rates/lower rent.

Is this considered proper?

It was dented and pushed in, but it could be pushed back out and is still functional.

@Sami Gren If there's a proper area in their unit to add one and if they're the ones that will be paying the added utility bill, I would allow it.

Keep all your paperwork and share with your tax professional to allocate properly.