I can't help but think this has to be negligence by both the tenant and section 8 considering they missed this in their inspection in the first place but now all of a sudden are demanding that I fix it?? 

You might be able to sue, but unless it was willful negligence on the part of the seller, I don’t think you’d win.

Since this represent a significant rent increase for the tenant's rent portion (even-though what she is paying is negligible for a 3 bedroom unit thanks to the section 8 voucher) I am concerned she may not be able to pay the new rent.

Not surprisingly in December 1976, less than six months after moving in, Easton sued the Strassburgers and the real estate agents involved in the transaction for fraudulent concealment, intentional misrepresentation, and negligent misrepresentation.

With that type of "discount", the $300 net negative cash flow is negligible.

Her lease states that she is responsible for damages to property due to negligence.

State and Chicago politicians have been criminally negligent with respect to properly funding pension plans, and have ZERO backbone in standing up to unions.

A hard credit check for a loan is going to lower their score by a negligible amount, if they are serious about buying in the next 3 months, it would be beneficial for them to receive a proper approval/underwritten approval from a lender.

And that's exactly right  The cost to start one is so negligible that it shouldn't wed you to the process in the least.  

There is room to increase rents about 5%+ without any questions which will negligibly help NOI.