"This will be filed as a business and not a rental because they offer substantial services and have a short rental stay."

Well, now you have to know if the LLC will file as Disregarded (Schedule C, joint venture or not) or Partnership (1065). If not partnership, their friend is an idiot.

What you asked is legal, not tax related, and locality-specific. And you have no idea if a change on the Mortgage will trigger a note call; if the change on the Deed will trigger transfer fees/tax; if their Insurance coverage is in their name, the LLC? Did they even get this covered?

They need business guidance from someone local. Not tax guidance and not from a Friend.