Make sure you consult experienced people like real estate attorneys and CPA's who can research 1031 exchanges and updates that affect them.These transactions are not easy and as you are transferring your old basis of the relinquished property to the replacement property much is riding on your decisions and legal paperwork from the beginning.

I considered legal action but my attorney indicated that it wasn't worth the fight.

Also check in the LEGAL or Homes For Sale section of your local newspaper.

Separation has no legal consequences where divorce does.Is bankruptcy an option?

and if you have an option to buy you have the legal right to enter into any contract with an end buyer or renter...it is no different than a sandwhich lease option...in a sandwhich lease option you have no obligation to pay the mortgage...the homeowner is on the hook no matter what.

Legal and tax wise??

Find out for sure as it will cost you $500-$700 (probably) to set up and comply with the 1031 legal requirements.

In this situation the bank made out on the foreclosure-they have covered their unpaid mortgage and legal costs with excess; however this is not the norm these days.

Give the legal notice required by your state law to go in and inspect--see what condition the unit is in & start advertising and showing it immediately.

Then'd I'd contact the PM to review the legal notice given by the tenant and when to insure that they did give proper notice.