I exercise.

This would be a separate lawsuit which alleges you owe for certain medical bills in response to the damages from the asbestos.

Regarding medical bills I have one that my insurance company never paid.

But there is a spread in there due to principle pay down.When someone is really motivated to sell (I've most commonly seen divorce, medical issues, job loss) they sometimes don't care how you buy because they "just want out." 

Your grandfather should also consider installing a buffer, such as an interim business manager while he is out of town for medical reasons (vacation to a cabin for a couple of days).

A master lease option (something @Brandon Turner has talked about) is not a sale until the option is exercised, right?

This is exactly what the ad looked like, no pictures or anything:nice 2 bdrm (potentially 4 bdrm), 1 bath (potentially 2 bath) on large lot. 1952 sq ft. lease with option to purchase as follows: move in: $1,500 option fee- applied to sales price when exercising option to purchase, non refundable if option not exercised or violating lease agreement (i.e. non payment of rent) + $1,500 first months rent (or prorated if not on first of month) + $700 security deposit.

I know it's not the best part of the city but at the same time is very close to the soon to be opening UB medical building.

Let me know if you want exercise this option and I’ll cancel the appraisal for you and refund the $400 we’ve collected.

You can then either sell the option, exercise your right, or allow the option to expire.