What additional costs and penalties would we face? 

I think I've been able to dig out additional info that would suggest this is much better than as it is presented. 

In addition, the association did not have enough money in their reserves so I couldn't do a HELOC on the unit. 

If she will not complete the document or do a background check I would be will to bet you will have issues down the road.

Additionally, I'm not sure if the 40 hours of coursework that I will have completed would ever expire or not.Sorry to use BP as a glorified Google here, but I couldn't find much about this on my own.

@Chris GrenzigIn addition to vinyl plank mentioned in the posts above, I have clients who will finish (polish) a concrete slab and use it as interior flooring.

These are professionals with additional training and a stricter code of ethics.

If there are any obvious issues like posts that are unsupported, joists that look not connected or cut, cracks or crumbling in concrete or block walls, anything that looks wet or signs of pests.I also keep an eye out for what feels like unpermitted additions or covered patios.

So my tax consequence should be about $3,300 (long-term capital gains from Property A, plus depreciation recapture of Property A), in addition to the tax (short term capital gains/ordinary income) on the gain on the sale of the replacement property C (probably about $15K x 24% = about $3,600). 

My business partner and I ended up forming another company and bringing in two additional partners that were already doing flips in the area to help increase our capital and our ability to do more deals.