Your lease should address tenant lease violations and what fees may be owed to cover your administrative burdens of having to deal with tenant violations.

I stopped for a while to do life coaching and energy work, and then I met a guy who was a broker that wanted to get more into the development side so we teamed up with his dad, a lawyer, and started up.As things have progressed, I am now finding lots of deals, and as it turns out, the guy I am working with is not really delivering the investors like he said he could/would so I am learning that part of the process now too as most of my deals sit quietly on the sidelines.

Quote from @Michael Morrongiello: That is also my understanding as wellThe junior 2nd lien gets wiped out it gets  wiped out from that property but the debt remains with teh borrower.. although unless its a commerical deal with a PG rarely do banks go after the borrower just based on the note. 

I would shop around, maybe the LO you're dealing with is inexperienced and is mis communicating or they may just have odd lending practices?  

You're going to struggle to find lenders willing to loan to you at some point unless you're getting creative, buying below market deals, or adding value via remodel.

Its not advisable to hold real property in corporations, and S Corp are more corporate-like.Just stay with the default partnership and deal with the 1065 and K-1.More importantly, discuss with a qualified professional or two.

In Feb this year (about 15 months into the deal) Scott tells me all the assets are up for sale.

I was part-time for 6 months while working a government job (no cell phones allowed in the building). 2 rentals closed in 6 months, no sales.

If you have all of your cash tied up in one deal, what will you do if another deal comes along?

Just a thought of other ways to make this deal viable.