You have to give a time period for him to fix or "cure" these violations.

In my state, the notice gives the tenant 3-days to cure the default before eviction begins. 

Not super common but I built one development where this was how the sewage was handled.  

See the chart from Fair Isaac Company (FICO) below: FICO Score Pct of Population Default Probability 800 or more 13.00% 1.00% 750-799 27.00% 1.00% 700-749 18.00% 4.40% 650-699 15.00% 8.90% 600-649 12.00% 15.80% 550-599 8.00% 22.50% 500-549 5.00% 28.40% Less than 499 2.00% 41.00% Source: Fair Isaac CompanyAccording to this chart, investors should use corresponding vacancy+tenant-nonperformance factors of approximately 5% for Class A rentals, 10% for Class B and 20% for Class C.To address Class C payment challenges, many industry "experts" are now selling programs to newbie investors about how Section 8 tenants are the cure.

A national buyer would review the BPO and maybe do some brief online research, but would not typically not know, as in your example, about the sewage issues or extent of interior rehab needed.

They did a "table top" closing, warranty deed signed but not recorded, no legal representation, and if the elderly couple who had no money to cure their foreclosure can come up with $500,000 in 6 months, they can buy they property back.

Not a strong argument ;-) I still had to pay off the loan to cure the DOS. 

Lenders stopped allowing rent by the room due to modifications done to the property resulting in functional obsolescence and significant cost to cure in the event there was a default and they needed to foreclose on the home and resell it, given that the main buyer pool for single-family homes are primary occupants. 

If they are in violation of the lease, give them a notice to cure. 

The violation - depending on your state - will provide a 'cure period' before eviction proceedings would begin.