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Thank you all for responding. I recognize many of your "names" from lurking. I am very grateful for your time!

From the beginning this has been strange. When they finally became aware of our wanting the tenant removed, they gave no response for well over a week (this was very early into contract). Finally gave response to talk to property manager 2 days before property manager went on vacation for a week. When property manager returned we were told they would remove tenant if we put up $4500 in non-refundable earnest money. We agreed. On August 24 we sent an addendum that we would put up the additional earnest $, they move tenant or we extend contract until tenant could be moved. They rejected and sent over addendum on August 31 which stated:

1. Buyer to deposit additional non-refundable $4500 earnest money. Should seller not comply with the following provision, earnest money will be released no later than October 16, 2007.
2. Closing to take place by October 15, 2007 or within 3 business days of tenant's removal, whichever comes first.

At first, this sounded great. But then we realized that they could still make no effort to remove tenant by October 15. We added to the 2nd provision that "Tenant must be removed by 10am October 15, 2007." They got mad at that.

The estoppel letter sounds like a great solution because that was exactly my fear - there really was a contract. This is a bitter divorce situation, the wife owns the property but the husband is controling all. Both realtors involved have questioned seller's behavior.

We accept that we are bound to the contract. We want the house. I guess we were trying not to start off investing with tenant removal (30 day notice is required for Texas) or it turn into eviction. Later that may seem "old hat". To my knowledge the tenant has been good about paying rent. We need to rehab because we really need the appreciation. It would not cashflow well to keep her current rent amount. Rent comps indicate it should be double.

There's more to the saga but this was the most pertinent. All in all, this has been very enlightening and we still haven't even bought our first rental property!

Thanks again for all your advice.

On July 17 we submitted a contract to purchase a property w/10 day option period. Couldn't view property interior because of existing tenant until under contract. Viewed property, tenant told we were insurance agents. Contract not picked up by seller until July 26. On July 23 emailed our agent to request removal of tenant before closing (dated Aug 31). Email not noticed by realtor. Tenant is on verbal month-to-month for $350 for a 3/2. House desperately needs rehab.

Have rewritten addendum to put up additonal $4500 non-refundable earnest money to guarantee to seller we will buy house but seller won't sign addendum. We offered cash (house only selling for $35,000) and wanted an early August closing or as soon as tenant could be moved.
Seller has refused to attempt any tenant removal. We still want the house with stipulation (not in original contract but attempted through addendums) that tenant be moved to another of seller's houses (which was told as an option by their property manager which is their family).
Now seller getting lawyer accusing us of breach of contract for not closing on 31st.
We think they still want to sell and we definitely want to buy but not with tenant.

This will be our first investment property and are pursuing it to rehab and gain equity to purchase others.

Is there something strange on the seller's part or is this normal? How long of a process is it to attempt eviction and do we have legal ground to do so? Does seller have legal ground?

Any thoughts appreciated. Thanks!