You must file a lawsuit against the occupants of the property, and they have the right to argue their side. 

You were asking her to expose herself and her broker of record to a potential lawsuit which she had no intention of doing,smart woman.If she says yes and it goes down the drain,you can sue her and her broker for giving bad advice on something she should never have gotten involved in which your lawyer will crucify them both for.It's not up to the agent to tell you about the quality of a potential investment,that decision is in the hands of the clients paying the money.Her job is to find the type of properties you are interested in and negotiate the sale with the sellers.Also she should advise you to be through in your own due diligence to find potential pitfalls.She can advise in she agrees or disagrees with the asking price and provide comparable evidence to support her conclusions but,the decision to accept her conclusions is entirely yours and you must be responsible for what happens,not the agent.

My (limited) understanding is that charging rent on a per person basis opens you up to lawsuits for violating fair housing  laws on familial status.

My guess is that this guy has some lawsuits already pending, or an arrest or conviction. 

. :)Look at the cash required to stop the foreclosure, the HOA liens/law suit and to get rid of the tenant.  

They basically said that if there is an issue and a lawsuit is filed, all parties will be named.

To be sure, in this case, it certainly appears to be theft, but make sure you are on solid ground as you don't want to be on the wrong side of a lawsuit.

In trustee states (States that do not require a lawsuit to foreclose) the trustee for the lender exercises the "Power of sale" clause in the contract and do not use the courts.

I was recently told by my financial advisor that retirement accounts are lawsuit proof, does the same apply for a self directed account that is invested in real estate, or will the type of investment open you up to litigation?

The value isn't 50% of the appraised value, because in joint tenancy the only way to obtain full title, without any agreement, is to ask the court for a partition of the property, basically a friendly law suit and that will have costs involved.