I think it also helped by disclosing this adverse material fact to the seller prior to closing.

Failure to repay won't result in some kind of adverse feeling from me, but I'll just make a note that my assistance won't occur again.

This became a problem when one of them, who had apparently been there a few weeks, didn’t want to leave and claimed he had squatter’s rights via Colorado’s adverse possession laws, which of course requires 18 years of open possession or 7 years of paying property taxes/color of title, not two weeks of crashing on the couch, but you can’t argue with crazy.

It adversely affects the people who I want and benefits the water wasters.

Looks like you have a great handle on things, but also are adverse to risk, (which is a good thing.) 

When you do that, you have to send them an "adverse action letter", which basically says that you turned them down based on something in their credit report, who you got the credit report from, and offer to give them a copy of that credit report. 

This lowers our tenants' security deposit requirements, provides us with a wider potential customer base, saves us from the administrative work of managing security deposits and, in this moment, takes us out of a situation where Governor Murphy's order adversely impacts us.  

Also, share what what actions you will have to take "according to the lease" and what adverse affects this will have on their financials and them as a tenant going forward.

@Karen F. even if you don't charge a fee, if you do run a credit/background check and use that information (credit, residential, or criminal) from that report in making your adverse decision, you are required to report it.

Would love to have a conversation with, or be referred to, anyone that has had success with adverse possession in Texas or is familiar with it's workings.