They have a lot of restrictions with rental vs. owner occupied and tend to be more competitive in the Boston market as they’re more price friendly for a first time home buyer.

Alfonso will need to discuss the topic with his plan administrator to see if what you propose is A) allowable and B) something they will facilitate.That is about all I can add to the topic, but wanted to point you towards the starting point.I do not foresee any US side complications, though it is possible any income to your partner may be viewed as taxable by the US.If you find the RRSP is in a position to make the transaction, you will want to connect with an attorney in Canada who can evaluate any tax/legal issues for Alfonso.

What you need to do now is set screening standards and write them down (make sure they don't discriminate). your standards should include things such as credit score minimum, income requirements, occupancy maximums (you have a legal limit, but you can set a lower limit if desired), as well as some rules such as: no prior evictions, no felonies, etc.

You hire a realtor a flat fee to prepare contract, disclosures making sure all is legal.

The title company we spoke to said they would need a purchase contract with legal description etc

There is a deed restriction given in favor of an anchor tenant.

I know that legally, I could hold her to the lease, but I'm not going to do that.

You can do it, but if it came down to a legal matter, the lease would set the standard. 

What are my rights and what legal action can I take?

I own an insurance and financial practice and could not justify the cost of the license, time required, legal concerns with REI, and overall cost.