They will be concerned about the chnage in ownership.

Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state.

How concerned should I be about the pending law suit?

If the lease deal is a really good one (lease payments are a lot less than the current bill) then you might at least take a look at it, but be aware that most leases include a "fixture filing"/lien which could cause a hiccup when you go to sell or even refinance the property.

This caused a need for new trim.

Rents run about $575-$595.I like the sound of $150/unit of cash flow, but am concerned in my target market it's out of reach. 

@Anthony Wick There are a lot of great comments from the Professionals regarding your concerns, and although I can't speak with the industry experience they can, I share in your frustration with my own experiences.

That being said, many of the smaller towns along the coast and inland have a smattering of multi-family properties, which may be a better choice if you're concerned about school district, etc.

If they are the ones causing the damage, you are right in that they need to pay for it. 

Only concern would be 121 exemptions and financing requirements for investment property.Mark