My questions are: should I move the title of my primary residence into an LLC to protect me from a liability lawsuit from a renter and would this affect the benefits of not paying capital gains on a primary residence up to $250,000, if I sold it in a couple of years, I do not have a loan on my house.

Though I knew my house that I was living in was going to be a good investment- however it wasn’t yet because it was just a liability that I lived in and had done a ton of repairs and renovation to.

Buyers agents rarely attend inspections as it can be a liability.  

After reading "Rich Dad, Poor Dad" while deployed, I immediately realized this truck was a liability and was killing my portfolio.

This agreement would give you funds (the amount of the SD) to cover your unknown liability of re-renting.

Also would be interested in any answer to lender liability for clean up if needed?

There is a lot of liability involved and not really a business you can wing it.  

This is not to penalize the applicants but to protect other residents and neighbors, not to mention our own liability.

I had a quick thought, if it goes to Tax Sale like they were wanting to do would they incur some form of expense like having a tax liability added to their taxes or some cost that they would have to pay for the process?

From a liability perspective, I think that's the way to go.