But he went bankruptcy before, and his current house is on short sale.Here is our concern: what if he declares bankruptcy again after he rented our house and lived there?

You should look at the agent contract - - it declares a time period for the agreement. 

I don't believe that attorney's fees are an automatically reimbursable foreclosure cost here in WA, so I'm wondering if there is an effective method for me to get my Attorneys fees reimbursed too.Gabe, in this instance would you have likely lost your investment if the homeowner had declared bankruptcy or claimed the home as his homestead exemption?  

Beware of asking tenant buyers to not be tenants and to be ownersThe IRS will nullify the lease option paperwork and declare it a disguised installment sale, a court judge could also.Keep a lease and option seperate.Account Closed@bil

The tenant made a bunch of noise that they were going to counter-sue, but at the end of the day they didn't have the resources to fight it and left.This sounds like a case for the Costa Hawkins declaration that you need to move back into your place, but it sounds like you have already tried that and she asked for too much?

You probably need to consult an attorney on this since he has now declared bankruptcy to see what your legal rights are to the property. 

If the property is ready to be rented and not in a state of disrepair, we declare it is being occupied for personal use.

Getting the Condo documents (bylaws and Declarations) will be a big help to the agent and attorney. 

YesHave you ever declared bankruptcy?

We also required renters insurance as well and the company provided that declaration.