The daughter is married with three children and mastiff dog.I specifically extended my inspection period to 60 days to work this through.Any advice would be appreciated!!!

If you buy, you do your inspection, you can have your buyer inspect and then waive inspections with you.You might let the end buyer contract with the seller, if the seller is agreeable and have either one pay you a release fee to terminate your contract and walk away. :)

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Fund control releases money as construction is complete.

Budgeted for 6 months so far but would like to extend out indefinitely.  

So I assume that if you bid on a HUD in the first 30 days of the extended period, you would bid about 91%, between 30-60 days, 81%, and 60-90 days, 71%?

The family is in a hurry to rent because they are temporarily staying in a extended stay hotel.

My investing interests revolve around real assets and extend beyond real estate into precious metals.I have had some success investing in SFHs in Palmdale and Lancaster CA, picking up properties between 2010-12, using leverage, that are rented out and generating positive cash flow. 

Yes, you can and in fact should, give a release of the option to the title company to escrow or your attorney, not the seller.