Again, that's what should happen, w/o having the benefit of having read the documentation.

Your best bet it an accountable plan in which you submit expense reports regularly.

I am in the process of getting all of the documentation together currently to get preapproved and am looking to pull the trigger on my first home this summer.

I submit Japan4.  

Or was the work done with permits and proper documentation?  

The area is more C+, bjut I'd never recommend buying a property with tenants in place unless there is (a) a strong and documented record of timely rental payment; (b) you have the opportunity to speak to the tenant about the condition of their unit and the property in general prior to the purchase; (c) you run a thorough background screening on the tenant to make sure they will pass your standards for a resident.Agents often seek to sell properties when they should strive to build relationships by offering good investments.

I have documented our experiences in the investor deal Diaries forum under the name project BP.

Did he sign any documents swearing that no work was done on the house without permits?

Upon our contract being submitted, we were told by the lender that since this was a Fannie Mae property, it was required that we list the property for sale for 5 days before they would accept any offers.  

All other terms to remain the sameOnce we signed, we submitted our earnest money deposit into this specific escrow company.