Also let her know that you may have to ask the additional occupants to vacate, or be added to the lease, but that you want to work on a solution with her, not just a punishment for having additional tenants.

@Todd Plambeck agree with your completelyalthough the desire to punish the person who tried to screw you over is overwhelming

I also saw tons of fraud but most of them were cut off but never punished because the state spends their resources on handouts and has nothing left for investigations or enforcement.

I don't really want to punish the 3 if one turns out to be a deadbeat.

If it's bad though it typically means a lot (of bad things).Those with no credit history on the other hand shouldn't be punished in my opinion.

That said, most lenders don't, but get caught saying a property is owner occupied when its not and the most severe punishment is prosecution for loan fraud.I understand your being anxious to do something as a vacation rental, but I would just ride out the 1 year as owner occupied and then from there, you wont have any issues.

Going to punish them because the landlord retaliated? 

why are you punishing the entire family?

Meanwhile, people that abuse the system don't get punished at all. 

That does not make him a professional tenant, possessed of an entitlement mindset (except insofar as he is in fact entitled to what he paid for), or someone who must be punished as proof the landlord cannot be pushed around (I'm wicked tough, respect my author-i-tie!)