If the lender exercises this option, lender shall provide a period of not less than 30 days from the date of their notice.

This is Avery useful exercise on long term holds. 

If you buy a $5,000 to $10,000 1st lien note on a property that you have to spend $3,000 to $7,000 to foreclose on, depending on what state, and 6-20 months to hold it, with insurance, servicing & such each month, and by the time you get it, its going to need $20,000 to make it worth $30,000 to $40,000, then why go through the exercise in futulity?

Basically, the Max amount purchase price, option fee, and the years to exercise the option?

Number one thing to find out though is how much rent would your parents charge, this is really an exercise in futility without verifying that right?

In the lease agreement it's states: LEASE RENEWAL:At the end of this Lease Agreement, Tenant shall have the option to renew the Lease for an additional term that is equal to the initial term of this lease (Term of Lease Agreement) pursuant to the terms and conditions contained herein.If Tenant or Landlord does not wish to renew the Lease, written notice must be given to the other party at least 30 before the end of the term (Term of Lease Agreement) to terminate the Lease (including any exercised renewal or extension thereof).My question is. because I want the tenants to sign my updated month to month lease with a few changes like: screening,required rental insurance and have will have to pay for garage access.

I'm concerned on how that will affect the tenant Buyers ability to exercise the option.

It becomes and exercise in herding cats - nearly impossible. 

These types of interactions with brokers like yourself who are not actually investing in notes but wish to tell the note investor how the loan should be treated are exercises in futility.  

. :)@C Bumby Yes I have a formal PM agreement and just as you anticipated, below is what's in the agreement:"(a) Manager shall exercise due care in the performance of its duties hereunder.