I didn't miss any payments and they have been always on time..Can they do this legally ?

I don't see any other options,  unless i am missing anything?

@Minna ReidThanks,I believe how the sale happened IS relevant to me because I would like to learn how to do it myself next time so I don’t miss the deal.It’s possible the ARV is off, but is says right in the deed that the amount owed is $280k and they are settling for $189k plus $2500 to the seller.I’m going to contact a few bankruptcy attorneys and see if they could help me out should I find a similar deal in the future.

I feel like I'm missing something from a certain angle that I'm not taking into account or there is an aspect that I'm missing.

If you are only looking on market then you may be missing out on more motivated sellers who are willing to negotiate based on their situations.

For the applicant that I accept as my first tenant, send them an acceptance letter and collect security deposit + first months rentI am sure there is something (maybe a lot) that I am missing.

In a nutshell, and unless I missing something (totally could be!)

I think our were missing adding in the security deposit on your example.Good Investing...

Realitors told me i was too late to florida in 2014 and I missed the boat.  

You would have missed out on making so much money and taking advantage of a great run in real estate.