The tenant is likely lying, they aways do, to get out of the lease for some other reason but knows legally the excuse is iron clad forcing you to let them out.

.* Instead of fixing the front unit's roof, replacing the leaky bits of cast iron plumbing and taking care of a handful of other requests we made, he offered to take $20,000 off the asking price.Since we had lined up a low down FHA 203b loan, we knew the house would not pass appraisal unless the major plumbing and roof issues were taken care of before closing.

House before 1970 have cast iron drain and wood frame house are more accessible to termine and foundation problem.   

I gut everything including the knob and tube wiring and the old cast iron plumbing even if it is still in good shape.

Old houses have cast iron pipers that will disintegrate (because of age and/or foundation shift).

If I come in low like that, my appraisal is iron clad, extra comps and explanation.

There is also a dent in the dishwasher and a curling iron burn on the sink.. are these all things the tenants should be charged for?

Hard for any of us to say if it's a good deal, since we don't know the area....it is a 1937 house though so beware...Main things to look for: 1) Roof 2) Foundation 3) Sewer (Cast Iron?) 

I find it so ironic that the majority of us are experiencing varying degrees of this good tenant fortunes, yet many are posting of "Housing Market Collapse" and speaking of how doom is happening, the end is near, blah blah blah.

(With or without asbestos,  lead paint and cast iron pipes.)You can lose money on a TWO percent deal, if the property is cheap and/or old enough, or in the wrong place.