So, if we are to be pragmatic about this, the question is really this:Would it be less expensive for you to replace the flooring, or not to do it and potentially loose this tenant and remodel the whole place.

If I didn't I would likely loose almost as much in earnest money anyways and lose the investment property.  

IF I make an offer and it is accepted, am I legally bound to the property no matter what?

Given the proximity to campus, the school has a vested interest in some of these neighboring communities - they're bound to get better over time.

Apparently the previous owner knew that he was at risk of loosing this and 9 other properties so he quit claimed all properties to trusts and created a blanket conservation easement restricting everything on the properties including simply parking on the land.

They are going to work around the tenant to complete this rehab so as not to loose a great tenant and still do the work.”

Plus, with homes with prior appreciation, you can loose the section 121 capital gain exclusion when you convert it to a rental.Run your residence through your deal analyzer as if you were purchasing it to rent and see if it meets your investment criteria and see how it compares to other properties that you are considering. 

When it goes down you loose your job your income and maybe more.  

Personally I think it is appropriate Karma that they pay for the benefit of such an outrageously low tax assessment with loosing the property due to their own negligence. 

The flooring has moved too much and pulled loose of its fastening system and it will not settle back down.