Closing on 3/31, Help Needed

[Christopher Vargas]

I have a motivated seller that has a problem tenant. The seller just celebrated her 87th bday a few days ago. The seller has not payed mortgage in 4 years and is highly motivated to sell before she loses ANOTHER house. I am not sure how long the tenant has stayed at the house, but she has been getting away without paying rent for at least 6mos to a year. The seller says its due to the fact that the tenant helps her with rides to all of her doctor's appt, shopping, etc, and she doesn't have the heart nor the funds to evict her, her son, her daughter, her daughter's husband, and their 4 dogs (2 chihuahuas and 2 large breeds).

I knew all this before we even began negotiating, but since the seller and tenant were with me at the kitchen table, I didn't want to upset anyone before the contract was signed by bringing this up. I waited for a signature, then spoke with the tenant. I told her and her daughter that they could pay me $800 for one month rent and $800 security deposit and they have to let my workers in for the rehab at any reasonable hour and they said they would think about it (no rental agreement signed, but still foolish on my part b/c rent starts @ $1200 in that neighborhood).

Because of recent personal circumstances in my own personal life, I changed my mind and decided I should stay (live) in the house and do the entire rehab on my own and contract out only when necessary. The project is quite simple and will take less than a month (mainly cosmetic).

The seller disagreed with the entire rent strategy from the get go and basically told me (in private) that she doesn't want them to pay under market value rent b/c they've lived free for almost a year, and at $800/mo, I won't be able to get them out without a fight. 

So...

I told the seller that closing will have to be postponed until she can deliver a vacant house.

I called the tenant today and told her that "plans have changed" on the rehab project. I told her that walls would need to be torn down, power turned off, floors ripped up, windows etc and that it would be uninhabitable throughout the project. She says she needs at least 15 days to find a place (other than family, which is an option for her, and she knows that I know that) and if I couldn't do that, she would have to get a court order for that minimum 15 days. I told her that b/c of the agreement between the seller and I, she would not be hurting me and that I will just move on to the next deal. She would only be hurting the old, sickly lady that has been allowing her to live for free.

So yeah, I let guilt play a huge part it that conversation, which is immoral, but given the situation.....

What other solutions have I missed. I'm saving 'Cash for Keys' as my last resort before a court order. I don't want to inherit a problem tenant though, so this may have to be the solution. I also want to do a 'live-in rehab' so a rental agreement is out of the question. I want this deal! Its a nice chunk of change for my family. And of course I want to avoid eviction all together (no budget space for an eviction)

SO, HELP ME OUT BP! Do I have all my ducks in a row, or is there something more or something less I can do?