I deny evictions unless they provide 6-12 months of prepaid rent...

We had one tenant who was supposed to be paying $500/ month buy had prepaid his rent at the rate of $430/month, which we did not discover until we got the leases.  

The tenant paid the rent for the month of February to the property manager, then the previous owner instructed the property manager to give me the entire rent of February.Everything seemed fine, but a few days later, I get a call from the tenant asking why they had to pay February rent, when they already pre paid for February at the beginning of the lease.

You might consider joining Pre-paid Legal.

Local lenders are usually full-recourse, but can be prepaid early.

The state Realtor association has a fine legal hotline, whose advice I bounce off of the advice from the excellent Prepaid Legal attorneys.Sharon gives outstanding advice on this topic.

One of the contingencies is that I agree to pay up to 3.5% in closing costs and prepaid items.

If the rental agreement is terminated under this subsection (g), the landlord shall return all security and all prepaid rent in accordance with Section 5-12-080(d).

No, these are actual costs not escrow prepaids (not escrowing).

Hi Account Closed - the closing costs amount seems a little high to me (even if that includes prepaids) if this is a conventional loan.