Do it, it will save lots of costs down the line and you can entice future renters that are coming in with the new heating system that you put in.Most places don't have separate water meters.

I know their original intent was not mortgage fraud, even thought that is what has occurred, but each one was getting some kind of benefit that enticed them into the situation.  

How do I structure my deal so it sounds enticing to the partner ?

I am less likely to negotiate if there is another offer willing to waive inspection, pay cash, close fast, etc.Make your backup offer as enticing as possible by removing as many contingencies as you are comfortable with.

Is there no incentive or motivation you can entice them with?

I think this might be a good option, but I'm not sure how to structure the terms that would entice fund'ers and still have both ends benefit.

Refinancing is very enticing indeed! 

What's the best way to 'entice' this man into selling his house to me?

Something that will entice them into signing a non-traditional lease. 

Either way it might not be enough $ to entice the seller to remove the tenants prior to closing.