I’ve also heard that he’s done the same “getting hurt” at work to the point where they paid him a settlement to leave.ANY HELP AND ADVICE, I WOULD BE EXTREMELY GRATEFUL!!!

Open (or re-open) the Estate of the grandfather and ask the court to have the executor/Personal Representative convey the property to you as part of a family settlement.

That way they are locked in on price and settlement date but you have some time to work your other deal.You may have to give them a sweet rent rate but it would almost certainly be less that the 40k in estimated taxes.

They can have high settlement charges at time so make sure you understand the full cost of taking that loan program before going under contract. 

The security deposit settlement is typically between the 2 tenants in this situation and it rolls over to the new lease, this is stated in the addendum and it is signed off on by both tenants.

There are things like cracking along the base of a foundation wall or if it is slab on grade, look for deep cracking in basement concrete which could mean differential settlement of a property which equals foundational issues.

The recommendation to keep pre paids and and deposits off the settlement statement is good.  

The more equity you want to have in the property either the better you have to be at spotting a great deal (like info inputted incorrectly on the MLS, adding a bedroom where others don't see it, etc) or solve larger problems (work with couples who might be going through a divorce, estate settlements, foundation issues, etc).

This could end in a settlement and your insurance (hopefully you have umbrella insurance and liability for the property) should cover it.

Don’t touch the last month’s rent or the security deposit until the matter is resolved with a judgment or settlement agreement