That is just a bizarre statement.Will some "go to any lengths to destroy what is a legitimate business?"  

Hardwood floors everyone loves but for a rental I would not install due to having to refinish them if renters destroy them.

What options do I have before closing to ensure this person doesn't completely destroy the unit and actually leaves etc?

And hopping for the best to get a nice renter who is not going to destroy my house.

in fact, there are so many, that the feds put a limit on the number of foreclosures that a bank can put out on the market because these houses were destroying the housing market in our economy. hence, the banks were forced to " sit" on many of them that they otherwise would have put on the market and sold well below value. so, te banks we left to decide which ones they would put back on the market. if you were a banker and you had 100 houses that you foreclosed on, 1/2 of them were loan valued at over $100,000 and the other half under $100,000, which ones would you put on the market?

I guess the tenant could loose their mind and destroy the place before they leave, creating damages that far exceed my reserves and CapX reserves.

Positives:Extra income.Today FNMA doesn't really care about non-conforming areas as long as LIKE properties transact in your market.Added income for a potential buyer.Negatives:Insurance - If destroyed you couldn't get it re-built.Possible fines or you could be asked to re-convert the home back to its permitted use.What happens if a tenant gets injured by living in a non-permitted area?  

Then, on top of that, your failure caused harm by destroying the borrower's credit, that can be worth much more than a house.

There are not a lot of foreclosures in Austin because the market is rather hot and sellers can sell their homes and make a profit or break even rather than let their home go into foreclosure and destroy their credit for many years.

The problem is that the water leak seeped into the downstairs unit of a duplex and destroyed the flooring.