I could definitely see a possible lawsuit as so and so did not get that antique buffet that has been in the family for 200 years.It is a shame that the death of a family member is often seen as a cash grab.

You may want to get the heirs sign a law suit waiver in order to get the deposit back.

I was hoping to avoid a lawsuit. 

Several house hack strategies that I have seen work well include, rent-by-the-room, LT/STR in-law suite, LTR/STR basement unit conversion, etc.

Owner hereby agrees to hold Manager harmless from, and to defend Manager against, any/all claims, charges, debts, demands, and lawsuits and for any/all damage done to or about property by any employee, tenant or guest of Tenant.

I see another lawsuit coming if non-owner occupied STR is allowed and the city does not provide licenses for it without a good reason.

If you fail to follow the rules, you may open your personal assets to a lawsuit.

If something bad happens in the unit and the tenants get hurt, he likely has no insurance covering him and open himself up for lawsuits.

Your real liability is when your tenant files a lawsuit against you.

If you fail to follow the rules, you may open your personal assets to a lawsuit.