Now if they are breaking the lease and you are making a new lease with him  I would have her sign a release if you are going to rollover. 

Let me explain, $35k is enough to do a small flip as in this:$120k ARV$64k purchase$20k repairs (70% less repairs)My main lender will fund 90% of purchase, 100% or rehab net of the 2.5% origination,so you'd need: .1 of $64k = $6400 down payment$2500 minimum origination feeCall it $2k for closing costs and insuranceSo to buy it you'd need $11,000They'll release the $20k in 3 draws so you need $7k or so to get to each one (this doesn't really need to be cash, but good for illustration purposes)Then you need to have 6 mos worth of interest only payments of $840 plus utilities, etc. 

Yes we should have gotten a lien release when he did the first job, but we didn't.

The tenant then says in a nice voice i never said i wanted to move out . i told her i have complied with all her request regarding the house and yet she still hasn't made any effort to pay the rent at all. tenant says her husband will call me later ,later that night i spoke with her husband who told me he had to call me from his other phone (the recorded line) I told him no and we speak now , I had it with these people I was done trying to work with them , .tenants agreed to move out in one week , one week later they called me and asked for another day , I told them ok . on the move out day , I pulled up to the house with two witnesses who are also people who work for me , and had them change the locks and check all the   just in case this women tried to pull anything , i had a release of possession form tenant was to sign , she wouldn't sign it , I also brought a copy of the lease  that they signed  ( in the lease it says if tenants breaks lease then they don't get there deposit back , ( house was kinda clean but there was trash all over the side of the house and the grass still wasn't cut, the now ex tenants started screaming at me about how she wasn't leaving with out her deposit , I told her okay , so I called the police and waited outside for them , they came and where kinda on her side until she started screaming at me all the time not arguing with her I can see she has some kinda issues , the cops tell her she choice to move out , but that she could still have a key because she didn't  sign that form i gave her , it was a catch 22 in my book , we did come in an agreement , she signed a form from the cops a no trespassing form and i agreed to give her $600 ( best $600 I ever spent to rid my life of this horrible person) when all was done we went to the bank and I got a cashier check ( which is the same as cash its just a record for me ) I handed her the check and she was all nasty I walked away, i didn't care what she said I want to clean the house up and screen better next time around .later that day i got emails , text message and voice mails from this women calling me names and basically just incriminating herself me , she went as far to five me her new address so that i can send her the remainder of her deposit !

Tell the other two tenants there is nothing you intend to do and that you will release them from their leases.

Make sure you get lien releases from all of his subcontractors for any completed work before you  give him anymore payments.

That's probably some of the best couple hundred dollars I've ever "wasted," because......In the alternative world where this person didn't verbally disclose that foreclosure to me and I'd preapproved them and sent them out house-hunting based on their excellent FICO score and everything else, they would have had their loan denied the last week of escrow, after all contingencies had been released: Seller would quite likely have gotten to keep the earnest money deposit, The buyer's agent would have been out their time/money/gas/etc spent helping them house shop, The seller would have had to put the property back on the market with the stigma, etc, and most importantly,The homebuyer wasted all that time, money, energy, emotion, etc, on something that was never going to happen anyways. 

I'll release more details once we have it under contract.  

The first step requires all of the damage to the electrical system to be fixed, and a permit/inspection from the city so that they can issue a meter release to the electric company.

You can file to get the property released from the foreclosure because it is security for a loan.