Your friend would not be a part of that transaction... and you two would end up 50/50 tenants in common.If the property is still in the estate not much changes other than the executor/pr conveying to the heirs first. 

Since I moved out, heard a lot has changed, which is why I am soliciting information about certain areas like this one since I can't drive the neighborhoods my self.

You don't mention what the $1900 includes so we can't comment but see if that changes your thinking.

The short sale surely has a restriction from transferring the deed as a sale.You may be able (read every page from the bank/seller) to change to a Living Trust whichis a family transfer deed NOT a sale deed.

I don't think you can charge a deposit that high, and keep it if their situation changes.

If the property is already qualified for Sec 8 then it should just be a  matter of changing the owner of record with the local housing authority. 

I remember very little about Subject To and Lease Option from the days of Ron Legrand, but that won't matter anyway, because I'm sure some changes taken place with how it's done as well as with the laws in Arizona.

I have a decent grasp on the process of completing a wholesale deal from start to finish but need to start changing my theoretical knowledge into real world experience. 

My plans have been forced to change due to some family needs and I am now thinking of selling it.

Plain and simple, it's not their property and they should be asking for approval before they make any changes to the property.