That's a very common solution in Canada but you live in an earthquake zone.

I think, unfortunately, your friend made some very critical mistakes that are going to cost him time and money.Here's what I see as the steps to unraveling these egregious errors:(1) Hire an attorney whom specializes in landlord/tenant law(2) Wait for the eviction moratorium in NYS to end (patience will be required here, as we're at 16 months and counting)(3) Under your attorney's advice, carry out an action against this freeloading occupant as a "licensee"  (I think it's called section 425?

Double to triple investment is fairly common it seems.

They’ll wait you out on big repairs while you are forced by tenant laws of common decency to put your tenants up in a hotel, just don’t do it. 

@Kelly Chun pretty common...

But what does that mean as far as my asset protection3) Since I'm in second lien position, is it common to add a personal guarantee/collateral assignment? 

This is a fairly common strategy, though.

There's a common thought out there that simply changing entitlements legally to a property doesn't change it's nature. 

Newer and newer requirements are becoming mandatory slowly in design be it high energy efficiency, material which gives more light-air but blocks noise pollution, unhindered connectivity, better insulation, common areas designed for privacy.Which trends you think will be in future of construction specially in term of Design phase and Materials which will allow designers and developers to deliver future requirements.

While it isn't common, people do back out prior to move in and I think it is unreasonable to think they should lose the entire SD.When we collect funds prior to move in we have them sign a separate document (lease is not signed until move in day or very close to it) that spells out what that money is counted as and what it is converted too if the lease moves forward and if they back out.