I just want to know what's legal or not.

Sometimes it's unavoidable, but you can definitely minimize it by being really comfortable with your original plan, and where you will cut the fat when (not if) you need to.Then, the construction loan is only very short term so you need to make sure you have solid contractor who can get things done on a timeline.

Others just require notification, or proper zoning, etc.

and there are foundation issues that will crop up and not if but when the soils there are expansive.. so those two things.. have to be taken into consideration.what happens as well is if you buy an owner occ... they could have very low tax's as they get the owner occ exemption.. then when it goes to rental the tax's sky rocket.. and poof there goes your cash flow you thought were going to get.Just like folks that live in Texas why would they buy in CA and subject them selves to CA income tax and the 800 a year franchise tax... when they pay none in Texas it all evens out.. plus they don't have the expense of travel there etc.there are better tax treatment states for buy and hold out there... and if your appreciation is marginal then cash flow is the only reason to buy them

Begin the notification process immediately.

It may help to find someone in that specific area since they would be familiar with the market and know if the deal is good or not.

At the time of the second claim, I received notification that if I file a third non-weather related claim within the next two years, I will lose my coverage.  

Definitely not.  

It can be a good idea to get a couple of addresses if they're willing to share and, depending on the work, verify if they pulled permits or not if they said they did so.

It's quite simple.....you can withdraw any offer/counter offer prior to receiving notification of it's acceptance.