It just seems silly to me that at age 40 with preschool age kids and baby at home that I should need to go back to work to help make ends meet or get ahead when we have so much equity in another property.. 

Equity's training programs are better and more helpful.Equity has a relationship with a mortgage company that will call and pre-qualify your leads for you (and they remain your leads).Equity is an 800-pound, elegant gorilla in the industry and particularly in Utah (where we maintain a 22% market share) which means that we can negotiate better arrangements with vendors even nationwide.Equity is very well represented in local boards and NAR.Equity's Profit Share Program is one-of-a-kind and pays out $40-$60K every month to Agents religiously.Equity's model doesn't eliminate the incentive for brokers to continue to be helpful to agents which results in higher service ratings.These are just a few areas.

However, by the time a mediation was arranged and attended, the issue would have been resolved by the home warranty.Also, the buyer's agent could be partially liable as they advised their client to close, knowing that there was an issue with the A/C.

This might be attributable to a few factors: more landlords are allowing renters to pay using credit cards (and waiving transaction fees), almost 40% of people asked how they were planning to use their one-time CARES act planned to put it towards a rent/mortgage payment, landlords have arranged flexible payment arrangements with tenants. 

Apparently, dual agency transactions are allowed in your state.I am guessing because the various teaming arrangements and trying to explain to you about brokers and agents, your agent may have glossed over it. 

We have a general idea of how the arrangement would look like, but we want to make sure we draft a legal document, if possible, among ourselves (to save on the attorney costs).

Personally I think it'd be a smart idea to bake some sort of clause into a house hacking lease that removes Landlord of such liability and asserts Tenants are aware of and assume the risk of covid-19 transmission in such a co-living arrangement.

They may have jumped to the wrong conclusion with you, but in market filled with cash buyers and over asking offers, they see less need to deal with unconventional financing arrangements. 

Depending on the lender, some may not be willing to work with you in this arrangement, so it's better to think through all your options and research any potential implications beforehand.

Are there any verbal agreements or arrangements between the current Landlord and Tenant?