Legal Breaking, Entering, and Squatting?

[Frederick Tee]

Hello all,

After exploring BiggerPockets for the larger part of a year, I finally did my first rehab which completed. However, despite all I've learned and numerous situations I've read about prior to delving in, it seems I'm always an exception. 

As I mentioned, the rehab completed about a month ago. The PM company I use started advertising as soon as the rehab finished and I gave them the go ahead. They do online advertising exclusively, so no front lawn signs or the sort. Anyway, the property was only up for about one to two weeks, and I get a call from the manager of the PM company. Apparently, a walkthrough with a highly prospective tenant was interrupted when they arrived to see that there were cars parked in front of the property, no lock box, and people inside the house. That manager was there with the local police. 

The story goes that the woman had signed a lease with someone who doesn't own the property, and paid up front from June until August and had moved in with her children and boyfriend. She claims to never have met the "landlord" in person and had paid through either Moneygram or some similar means. So nutshell is someone falsely advertised my property as their own, got her to sign lease and pay several months upfront, break into the property and move her in within two weeks of it completing rehab. How valid her story is and whether or not the lease she had shown was fabricated by them or not will probably never be known. However, the manager told me that we could either try to onboard her as a legitimate tenant, or we would need to send a 60-day notice to vacate (which the police had even told the "tenant" while he was on site that she was safe to stay for at least 60 days because we would need to send a 60-day notice). I advised that we could try to onboard her, as it was the most efficient option and they had confirmed she had more than enough monthly income.

Last I heard before today, was that the PM company would try to see if they could help the "tenant" recoup some of the payment she had sent to the "false landlord" to use as payment to me. However, today I received an email that they had sent a 60-day notice to vacate, so things clearly didn't work out. It also explained that they were having trouble communicating to the "tenant" and not hearing back from her, and the last thing they heard from people at the residence was when the boyfriend called asking if the property was for sale. They also told me they were checking in with their in-house attorney to see if they could legally lockout the "tenants" after the 60 days were over since they aren't actually tenants.

Has anyone experienced this before or have any knowledge into this sort of situation? The property is located in Newark, DE if it helps. It baffles me how people can legally claim access to a house that isn't theirs by coming up with a false document signed with someone that doesn't even own the property. I'm not going to cry over spilled milk and complain about the few months of lost rent, since that's something I was prepared for. What I'm not prepared for is the house was freshly rehabbed, and I fear that when they either move out or are forcefully removed, that the house will be in less than desirable condition, or require repairs that I otherwise shouldn't have to do, with no rent money to pay for it. Would any repairs needed be something I could claim with my landlord insurance as vandalism or similar, since technically people broke into the house and cause damages? 

Thanks sincerely for any insight.