The purpose of 1099 is to prevent tax fraud.

I'm also not sure why the husband thinks he's entitled to a cut of the profits, unless he's paying an identical cut of the expenses.  

One letter from an attorney to the son or all of the owners might be enough and it shouldn't cost you very much. 3) Self-managed HOAs are vulnerable to fraud and theft, it's possible that they are collecting dues and not paying any of your bills and I'm certain they probably aren't doing anything according to your governing documents or the law. 

Bank Fraud??

Come to find out there were multiple layers of fraud and we paid about twice what the property was worth.Do your research on the turnkey company and make sure they have a reputation for honesty and integrity.  

Furthermore, don't waste your time trying to be claims adjuster and fraud detective.  

(Because if you DID pay him back, that was "proof" of YOUR fraud).

It's those maniacs that buy homes cash via quit claim deed off of craigslist that really get screwed.Make sure your property manager is a licensed real estate brokerage.Google Clayton Morris scam and/or Morris Invest fraud for a cautionary tale of what not to do when buying turnkey real estateUnderstand you can not eliminate all risk, only mitigate it.

I am not aware of any diligent effort to verify that as being the case... however, that would be mortgage fraud and would carry severe penalties/legal action if one were to be caught doing so. 

If any tenant pays for any repair, say arising from any emergency they are entitled to deduct costs paid from rents.Tax wise, an owner would be having someone else paying for something that they are required to depreciate, when you take expenses as one deduction to income or over any period that they did not pay for that would be a tax fraud issue.There are also insurance issues, in residential a tenant's policy does not cover the building or improvements.