This will state on record that they broke the stipulations of their lease and give them an opportunity to cure it (saving you rental income and the hassle of filling a vacancy in the winter once again). 

So now I understand it’s just demands from both seller and buyer and a referee to handle the situation under the set stipulations.

That being said, before you go deducting from the security deposit, make sure the lease stipulates that this is something you would do if the tenant put excessive holes in the wall. 

Basic contract law stipulates that if you both sign on the dotted line, and the clause does not violate state or federal law, you are obligated to follow the clause.

We let them go month to month with the stipulation that we would be working together to find them appropriate housing.

However, I also protected myself with a buyer's broker agreement which stipulated that I was to be paid a minimum of $X,XXX or Y%. 

I would make stipulation in your contract that requires the seller to sign one year leases with these tenants.   

CA contract law stipulates that hand-written material takes precedence over typed material and typed material takes precedence over pre-printed material.So the parenthetical takes precedence because it is typed while the default is pre-printed.

My advise would be to just put the unit for rent and not include any stipulations of who you want in the property.

Guess who the client is going to blame - EVERYONE (i.e. me) So, I make it a stipulation in the contract that open permits (like any other foreseeable liability) be resolved by the seller well before close.