The back unit is in bad shape (no immediate danger, but it's likely something major will break sooner rather than later) so we would like to serve notice to the back unit tenant upon closing and proceed with renovations ASAP.Can anyone recommend the letter/legal forms to use?

Also, there is a Fannie Mae HomeSyle loan that will allow renovations.  

I couldn't find any fannie mae regulations for this. 

Turns out the water had been turned on at 10am today, and from that time until 4pm when the seller walked in and noticed, the toilet upstairs had been gently burbling over the top of the tank, running down to the floor, and finding its way into the basement.

I just noticed that your question pertained to "assignment fees".

Do I need to give notice and then evict if necessary?

I didn't ask a broker but I just looked at the pictures and noticed it's already fixed up or the units have been updated.

So far they seem to be receptive when I send a notice to clean something up, but everytime I check on the place, there's something outside that looks awful.

I have also noticed that many retirees also are mom and pop investors.My full-time job is in law enforcement, and while I love real estate, I would prefer to not work in it full-time as of right now.

Our leases state that the tenant must give 60days notice and the equivalent of 1 months rent to break lease.