This increased demand and consumer spending during a time of extreme low supply, means prices go up.Remember, this is the third inflationary housing policy in as many months proposed by the federal government, all during an extended 3-year time period of high inflation, which is still near double the Federal Reserve’s target rate.

During the term period, do i take over mortgage payments and pay the seller a rental fee/rental premium from the cash flow?

We are passed all contingency periods and are ok with losing the earnest deposit and moving on.

At the end of the 14 day period it would be my choice to fix the door and charge him or to take other measures.When i asked her if she would send me a copy of the noncompliance letter to the tenant, she said she wouldnt do that unless this goes to court.

The PM should have known the local laws with the 21 day period, but honestly even if they did send it, it is unlikely you'd ever see that money.I would work with another PM. 

It might not even be accepted on your initial terms and most states have buyer focused contingency periods, or a statutory period of 7-14 business days to remit the deposit, perform inspections, organize appraisals and generally renegotiate or cancel without risk to the buyers earnest money deposit.

You can always extend the closing until the repairs are complete.

Go with a month to month or a shorter lease period.

I was told they only do increments of 12 months so I simply said extend it to the maximum allowable time. 

Technically L&I does not have to issue a new rental license after the 3 year period has lapsed but sometimes it does.