At the end of the day, every possible legal action I can proceed may just lead to eviction which is 8K plus 6 months of no rent and time which is ~20K in my case (not including any potential trash/damage they may leave to the unit). 

I painted it, redid the floors, put on new doors and hardware, fixed all the existing issues (leaks in roof, toilets not working, sinks leaking, water damage on exterior and upgraded the panel to a 220V) What was the outcome?

Their investigation group will do a good job in ferreting out any impropriety(ies) and New Western's E & O insurance will pay damages if their insured (NW) is in the wrong.Notwithstanding, to do business with them as a buyer, you have to agree to and sign their disclosures. 

So, there is a set time so that tenants can sue to get it back plus additional damages.

One roof was storm damage and covered by insurance.

There is significant water damage in the kitchen and also mold (possibly from over time, but not sure).

They talked of pets and children to be much more common, meaning damage.

.- Insurance companies do not typically cover termite damage unless the damage is so severe that it causes a floor/ceiling to collapse.

I want to first point out that the property needed renovation after apparently a storm that damaged the foundation of the home and it took about 7 months and a great deal of money to fix.

And this was after the buyer had paid the mortgage current.Proper sub-to contracts provide for significant liquidated damages in the event the seller behaves like this.