The issue is finding a buyer for this portfolio.

Whilst legally this should trigger the sale purchase clause and put you in breach of contract, both of them admitted that the transfer is a common occurrence and not a big deal.

Alternatively, you might be able to make the LLC your "property manager", but that too has potential legal implications as in many states to manage property it doesn't own an LLC might need to be a real estate brokerage to legally do the property management.

You did not mention any payment issues, have you been collecting mechanics liens with each payment installment?

Taylor,I hope you aren't still dealing with this issue!

Each year by January 31, you or your bookkeeper has to total up how much you have paid to each person and issue each one a 1099, which is a simple statement of that total amount with your contact information as the payor. 

Given the circumstances you've described, it seems you have a strong case for taking legal action against the seller.

I want to know if a sale agreement offering the buyer (renter) the option to buy the home after 12 months a valid/legal contract in the state of Michigan.

@Nana Ofori-Minta yes legally there is no problem. 

Out of state investing is fraught with issues large and small, so stay close to home and avoid the hassles OOS involve.