That was my assumption - that I could terminate if issues came up during inspection (within the due diligence period) and not have to forfeit earnest money.

I have this clause in my contract "Earnest money shall be forfeited in the event of Buyer default." 

I hear that, besides Puerto Rico, Illinois has the largest pension underfunding in the US.So, an argument can be made that your money (money that you have put into the system and can therefore take out before your retirement date - and forfeit the retirement benefit) should be taken out and invested elsewhere, anywhere safer than the State of Illinois.

You have the upside of limited risk exposure since you are not liable for the mortgage debt as well as being able to generate cash flow if you can retain high booking percentages but that comes with the downside of forfeiting any equity positions in the property itself.

Does the lease state that there if the  lease is broken or the signer moves out before the end of the contract that a fee or forfeit of deposit will result?  

However, if the RTO is done with a down payment or option fee as a close ended agreement - meaning the homeowner has to execute the purchase by a certain date or forfeit the upfront money - then it should be assumed to be covered by the regulations of Dodd-Frank &/or the Safe Act. 

He added me as a co-defendent to his suit after I bought the house at auction. 

A quick search reveals this entity has been forfeited a couple years ago for non payment of franchise taxes. 

I would caution on one piece, and I'm by no means a tax expert, but if she uses the property more then 14 days out of the year, she maybe forfeiting any tax write offs from the other properties, so I would just have her follow up on that piece first with a CPA. 

But, you forfeit the tax free status of the death benefit.