Is there a type of mortgage insurance or bond you can get for owner financing that secures his position? 

Secondly, he again did not fully disclose everything and was pushing for the signature on the final closing documents, in them he has 2 seperate title agencies involved as well as a third party construction company listed as the policy holder for the insurance for the home, and the figures for sale are different from those on the sale agreement document that I did sign, with clauses included that state if the title is not free and clear that the buyer has the right to sue me for insurance purposes and to cover the silent second mortgage that I was only informed of because the title agency called me to say something was up after arranging the notary to come to me to sign the final documents (at which point I said no and had a copy of the closing documents emailed to me), and again the so called real estate agent negotiating the transaction is listed as the buyer (under the guise of being part of ushomebuyers.com, same as the agreement to sell). 

It sounds like a challenging situation, and handling it requires balancing the tenant's rights with your obligations as a landlord.

If your concern is liability, what I did was get an umbrella insurance policy on the properties I house hacked under my name.

This is a very common agreement, in your space your problem and they also should have insurance that if its extensive insurance would cover it. 

They understand their obligation, so you don't need to keep reminding them or giving them chances.

In the past with owning duplexes in Milwaukee, One rent paid for the mortgage and the other paid the property taxes and insurance. 

You can check their insurance coverage, any active lawsuits they have, their workers comp rate (how safe they are on the job site), and other metrics.

Landlord Insurance: Get coverage for damages, liability, and rental income loss.This post does not create a CPA-Client relationship.

Only 2.14% CoC return though 😞My all in is about $4,100 which includes $180 required flood insurance.