First the bad, most banks will not fund the loan nor will most home owner insurance companies approve a policy until restoration and remediation is complete.

We are confident that the one delinquency and the investments that are now REO will be remedied to your satisfaction.

@Troy LusterI think your asking should you demand remedy of tenant caused damages before they move out.  

Any unseen issues will be presented to the Seller for remediation/negotiation if required.  

Its like when you go in for surgery and they take all of your vitals, but until they cut you open, they really don't know.Also, ask to speak to some of their passives.

Many of the remedies you suggest would be illegal in many states Those who break the lease or have the inability to pay will probably not have the money to pay your fines  Check with property managers and attorneys in your state to make sure your are complying with state laws There just was a large forum on towing a tenants car if they fail to pay rent https://www.biggerpockets.com/forums/51/topics/486...

Once they get involved, they are obligated to complete the smoke and water remediation completely.  

I am currently facing the same issue, and here are the steps I have taken to remedy it.1.)

But my decision would also depend a lot on these three factors: the amount of rent I was receiving, the cost to remedy, and the extent to which the tenant is a pain. 

I am curious if I am understanding the only way a tenant in Texas has a right to withhold rent is if there is an amicable agreement between tenant and landlord or if the landlord fails to remedy a problem with the house that impacts the the safety and health of the tenants.I am trying to keep things simple and not complicated on this question. :)