We then found a parcel of land which was for sale on the tax forfeit list for 17k.

The cool part is that IF they do not exercise the option, any and all payments are forfeited and you can sell the home again.I highly recommend that you have an attorney draft these agreements for you if you decide to go this route.  

Agree with the contributor above; but I am curious how the escrow was forfeited without the termination being signed by both parties. 

In reference to @Peter Walther post about foreclosure, the following is copy & pasted directly from the State Bar of Wisconsin Form 11-2003 Land Contract:"Purchaser agrees that in the event of a default in the payment of principal or interest which continues for a period ofdays following the due date or a default in performance of any other obligation of Purchaser which continuesfor a period of days following written notice thereof by Vendor (delivered personally or mailed by certifiedmail), the entire outstanding balance under this contract shall become immediately due and payable at Vendor's optionand without notice (which Purchaser hereby waives), and Vendor may singly, alternatively or in combination: (i)terminate this Contract and either recover the Property through strict foreclosure or have the Property sold by foreclosuresale; in either event, with a period of redemption, in the court's discretion, to be conditioned on full payment of the entireoutstanding balance, with interest thereon from the date of default and other amounts due hereunder (failing which allamounts previously paid by Purchaser shall be forfeited as liquidated damages for failure to fulfill this Contract and asrental for the Property); (ii) sue for specific performance of this Contract; (iii) sue for the unpaid purchase price or anyportion thereof; (iv) declare this Contract at an end and remove this Contract as a cloud on title in a quiet-title action if theequitable interest of Purchaser is insignificant; (v) have Purchaser ejected from possession of the Property and have areceiver appointed to collect any rents, issues or profits; or (vi) pursue any other remedy available in law or equity.

I never receive the tenant security deposit to my business checking account - I only receive the rental income, including when a tenant forfeits any portion of the security deposit.

The net payment is a little more than half the estimate.My questions are the following:Does the tenant forfeit their security deposit if the cost of repairs is higher than the net payment?

A literal chunk of principal gets forfeited forever (via upfront MIP) and it never gets back to you.

If she forfeits her last month's rent and deposit, that gives you through February to find a replacement Tenant before you start to incur a loss.

Another option is this: what you can do is take a deposit to hold the place (and have a signed deposit to hold agreement), but they forfeit the deposit if they fail to rent.

And where I am at, you have to put 5% real cash down to be able to bid in county auctions, and if you don’t close the next day, you forfeit the 5%.