You don't want to open yourself to a lawsuit for failure to disclose material information about the property.

lawsuit?

Secondly but most importantly for me is to not lose my house in the event of Any lawsuit.

Basement egress windows are $3-5k around these parts, definitely worth the money as opposed to a wrongful death lawsuit and lifetime of guilt IMO.

If the state defines whatever you are doing as transacting some form of business that requires you to register the business in the state, then that might determine where you have a legal obligation to incorporate.If whatever you are doing does often or occasionally require having to bring a lawsuit where you are doing business, most states will typically require you have to be registered or authorized in the state to sue.

Paying extra will lower your interest expense (less tax deduction) and higher equity properties are more target to lawsuits (mortgage can be good protection too). 

It's much better to pay a few bucks out to them now than face issues or a lawsuit later! 

Will depend on several factors like the type of property, type of tenants, your risk tolerance, other assets you own, your estate planning, laws where the property is located, etc.Any lawsuits would be limited to the assets of the LLC and not your personal assets (assuming you run the LLC appropriately and the corporate veil is not pierced).

- LLC has a commercial general liability policy up to $2M ($1M per incident)I would like to protect our personal assets from lawsuits from the property management business.

The danger is that once someone files a lawsuit against you it will be too late, since you cannot restructure a business/company after a lawsuit has been filed against you.