@William Thorn just happened to me 10 days ago, 3 days before I was ready to close on a piece of apartment land the neighbor filed a lis pendes and law suit claiming adverse possession rights.

State law may require you to keep damage deposits in a separate account.

My question is are there any loopholes that anyone has seen to get around laws such as this?

Rent Control is pretty much laws created by the local incumbent tenants to keep out the competition.

Is he required by law to claim the interest when filing his taxes?

Even if you don't have to do it by the letter of the law today, the new lead law will require you to do it sometime in the next few years anyway. 

The DST is viewed as an estate planning tool, and therefore exempt from the far-reaching corporate tax laws set forth by California’s FTB.

Also, from a public records search, I can see that the bank has filed a law suit against the owners for nonpayment of their debt.My questions are:What is the best way to approach this deal?

@Jason D.I’m in a similar situation with a little twist, if you can also help me out :)My in-laws and I have agreed that I will personally fund 50K to rehab their single family house.

If one or more investors just pays money and expects to get a profit based on others' efforts, you have created a security and SEC laws apply.