I sent it to my insurance, but was told I should've notified them within 30 days, but will handle legal issues.

2.What, if any, are the legal implications of this?

I had some advisors and traveled to some meet-ups so I have been in touch with those folks.

@Rick Zavalago to all the REIA meetings and talk to all the local investors

It was possible for a resident to view a property, be approved, sign a lease, and move-in without ever talking to or meeting a human affiliated with the owner or property manager.

Talk to lenders in your area and look for meet-ups for investors. 

This way, you're covered legally, and your lease includes everything from rent details to what happens if someone decides to turn your living room into a circus ring.Now, about finding those gold-star tenants, it's all about the background check.

I went on to say… ( in our open live meeting forum) that one of my buddies from my previous REIA said that a one or two day vetting delay would be a perfect way for insiders to get the timing advantage on the deals….

Second egress/exit was not done correctly its not in use it needs to be taken down and redone if I want to legalize it. 

Before committing, conduct due diligence, seek independent financial advice, consult with legal experts, and have open conversations with your friend about expectations and potential conflicts.