@Russell Brazil That must depend on the state because here in WA we're always told to do a 'Rental occupancy after closing' agreement, it's an MLS form that is essentially a lease.

There are actually a lot of variables with your situation: Your LLC- Single member, multi member, how's it taxed Your partner- Are they listed on the LLC, operating agreement with them, ect 1 house- is this a primary, rental, both, flip, how was it bought- what's it's purpose? 

We are meeting this week with a lawyer to hammer out the operating agreement.

Bulletproofing your LLC is more about satisfying the requirements of the operating agreement than creating the paperwork. 

Did you have a written and signed agreement with them?

We both desire a partnership agreement to establish the terms and conditions of our new venture.

@Cary Miller If you really want to avoid talking to a lawyer, first read the Section 8 agreement thoroughly and see what your options are.

Didn't realize that $50k had to be disclosed if the agreement is between myself and seller.

I initially planned for a lawyer to draw rental agreement which would prevent establishing residency.. apparently this is not possible in IL. 

Do we negotiate agreement, sign Assignment Agreement, send it to Title Company and THEN do inspection?