If they are, then you can change the terms (or terminate) with proper notice.

My main purpose for this post was to discover whether what I am finding is typical and I need to reassess notes as an investment strategy or if my experience is merely the result of where I have been looking and with proper guidance I could find that notes are a good investment vehicle. 

I think after this property is properly rennovated, I shouldn't have a problem finding a decent tenant.  

They are called "accessory dwelling units" and are only allowed in properly zoned areas.

Notify the proper authorities and take this out of your hands.

I live in MD and I am aware that there are many rules you must abide by in order to properly wholesale a home.

If the lease has terminated you can move to eviction but you must provide the proper legal notice in order to get a court date (probably a full 30 days).

The landlord could properly charge only $200 for the two years' worth of life (use) that would have remained if the tenant had not damaged the carpet.244 Repainting walls One approach for determining the amount that the landlord can deduct from the tenant's security deposit for repainting, when repainting is necessary, is based on the length of the tenant's stay in the rental unit.

Perhaps it is for the best though, this way I think there will be less risk of me entering into a deal without having done my proper home work. 

Those banks selling off generally have "buy back" provisions built into the loans in case they were not underwritten properly and a default occurs.With commercial lenders they look at liquidity, net worth, annual income, and track record.You can overcome track record with high net worth.