Plus, you can have just one umbrella policy for the LLC to cover multiple properties which is much more efficient.Yes, if you are highly concerned about a lawsuit, then you need to establish LLC(s), refinance/finance with commercial loans (whose rates and terms are less favorable than conforming residential loans) so the mortgage is given by the LLC (and not you), and operate the LLC correctly to protect/maintain its corporate veil.So, sounds like you want to slowly change your existing LLC to a holding-type LLC? 

@Michael Plante my home market is not conducive to the strategy of small MF properties and the landlord tenant laws are not in our favor.

All that cash comes from the LP, who makes $6,300 less.It certainly seems like this is 100% skewed in favor of the Sponsor at the expense of the LP, based on my understanding.

Here in NYC, landlord/tenant laws are increasingly favoring the tenant so you might have better protection OOS.That being said, NYC is still a great option.

As I see it, you either perform to meet the bank's new demands, or leave this bank in favor of another lender. 

Some loans will come with defeasance or yield maintenance, while others will have step down prepayment penalties.A good loan broker who specialized in MHP debt can guide you with respect to the right choice for you as the buyer, which type of lender will be best suited for the park, where the terms will be the most favorable, and where the hurdles will likely be.

I don't think either of you do yourselves any favors in this exchange, to be frank.

As I caught the real estate bug I sold off all of those other assets in favor of cashflowing real estate to reach toward financial independence.

Does the signed agreement I have with this contractor shift the liability to them in the court room, and are they now responsible to pay damages (if the judgement is in favor of the tenant) even though they were not named in the lawsuit directly?

On the other hand, the deal structure might be tilted in favor of the capital partner at the expense of the sponsor's investors.