This is good.Also, a little backstory:  the reason I mentioned insurance, was a developer I worked with in Colorado finished a condo complex in the early part of the 2000's, when there was a rogue lawyer whose business  model was buying a condo, tearing into the structure looking for any defects (as minimal as sheetrock screws might be spaced @ 12" instead of 8"), then going after the builder, which of course was actually the deep pockets of the builders insurance company.  

Because now there is a major defect discovered, they are supposed to disclose that if this property goes back on the mls.

Wholesaling is enough of a juggling act when the title is completely free and clear, and you may have a hard time finding a buyer quickly and assigning the contract when there are known title defects.

Other paperwork: Purchase and Sale Agreement, Lead Paint, Seller's Disclosure of Defects, etc.

A) Buy out investor 1 with cash or assumed mortgage, finish rehabbing house in your name with various unknown defects from shoddy workmanship, sell it at / near retail, and pray for no future liability issues.

.😊  I calmed down and re read the contract again trying to figure out what  to screen grab for you and found that the home inspection clause box IS checked- which discusses inspection for material defects.  

But when there is an issue most title companies work diligently to correct any defects so that a claim does not have to be filed. 

You can give back a little for what a normal person might not see in a walk through that might truly be defective.

Seller is not aware of any structural defect or adverse geological or environmental conditions affecting the property and its value.7.

If you have a good plywood subfloor with no noticeable seams or defects, you have a lot of choices in the $1/sq foot (materials only) in a low end rental.