If you choose to exercise your inspection contingency after the inspection all earnest monies collected by the seller are to be returned to you the buyer.

Account Closed until you exercise the option you are a renter.

They both have existing mortgages + delinquent taxes - I am wanting to see all options (wholesale, subject to, etc) I can exercise to retrieve the homes and also get more clarity on this question -Why would I purchase their home (after covering the mortgage) + tax liens when I have a possibility to win it at auction for a possible fraction of the price?

Politely deny their request and if they keep giving you a hard time, tell them they have an early lease termination fee in their lease and can choose to exercise it if they wish (assuming you have one).

It's a math exercise to determine if it's a good investment.

Also, the bank can exercise the Due on Sale clause and can make you pay the full amount immediately.

Some breeds need lots of exercise and will not do well in a house if they don't get it.

If the owner of the OC decides to exercise that option, they still need to come up with the down payment. 

My tenant-buyer successfully executed their option last week and purchased the house. They are asking for part of their rent back since we closed within this month, and there are still days left in this month.
What d...

and surely they took you through the exercise to compare your taxable gain without a reverse and your savings by doing the process???