I would assume you could put a clause in the lease option agreement stating something like “the property is currently not inhabited until X,Y and Z have been repaired, along with anything else that may be required by ___ city, county etc.”By doing this, it makes it easy for contractors and rehabbers to get into the property since you are offering terms… P.S.

The current building was inhabited till Oct 9/07 but is in need of extensive renovations.

Then, you both have JOB's with enough current Income to put you both in the top 10% of inhabitants of this Planet Earth.

I do have a clause in my lease that allows me to terminate the lease if the property becomes inhabitable, so I plan on doing that, but am unsure the timing involved in cutting ties with the tenant.

In pretty much every state, the landlord is required to maintain the home in habitable condition, which includes having intact (non-broken) windows (especially in the winter). 

Should the inspection concludes that the property possesses fundamental flaws which renders the property Inhabitable and /or the repair costs of those flaws would equal or accede the sale price of the property, the Purchaser then reserves the right to remove himself and all his obligations of this contract and the seller agrees to refund the earnest money to the Purchaser in full."

If it is decent and inhabitable, your lender should be able to finance it If it is not inhabitable, then you could get a construction loan through your lender to bring the property up-to-speed and then refinance into a permanent loan once it's done.

It was inhabitable but I saw a lot of potential and eventually agreed to a $90k cash sale.

I second Nathan's post - typically house hacking is going to allow you better loan terms as you're inhabiting the property, and allows you to be on site for when things inevitably go wrong. 

She had to hire a lawyer to fight saying that she's not paying for HOA fees when the condo was inhabitable.