There is a very high foreclosure rate, the foreclosure process is sssllllooooowww, and there is a huge issue with lead paint lawsuits.

Even if you are able to slip through the cracks, a deal that ends badly can very well lead to lawsuits that expose any compliance failures.

A successful lawsuit against the LLC could take its assets but not yours.There are some downsides.

A funeral's cheaper than a lawsuit.

As you probably already know, there can be serious health problems caused by mold and mildew and you do not want a law suit as a result of someone being exposed to something you caused.

In my professional career, which is insurance, I've seen and defended many $1M lawsuits, and paid them out.

If this ends up as a lawsuit your defense would, of course, be that you already provide a source of air to your tenants and there is no need for this person to also have a window unit in addition to (what I'm assuming) is central air.What type of leases do these tenants have? 

In a lawsuit let them get the land but it'd be a shame to lose a personal residence in a liability case.

With the mortgage anyone trying to sue would see the recorded mortgage to your mom  (make sure to record it) and see that there is reduced equity - that might deflect a lawsuit in itself.If she is lending to you below the market rate the difference is considered a gift and will count against the annual gift limit.I would suggest paying her the market rate.  

I ideally we would love for my mom to live and one of our homes but she needs her own space We have thrown the idea of making her a mother in law suite the back.