What you need to do now is set screening standards and write them down (make sure they don't discriminate). your standards should include things such as credit score minimum, income requirements, occupancy maximums (you have a legal limit, but you can set a lower limit if desired), as well as some rules such as: no prior evictions, no felonies, etc.

You hire a realtor a flat fee to prepare contract, disclosures making sure all is legal.

The title company we spoke to said they would need a purchase contract with legal description etc

Make sure you Purchase and Sale Agreement has contingencies for inspection and partner's approval.

I know that legally, I could hold her to the lease, but I'm not going to do that.

You can do it, but if it came down to a legal matter, the lease would set the standard. 

What are my rights and what legal action can I take?

I own an insurance and financial practice and could not justify the cost of the license, time required, legal concerns with REI, and overall cost.

Subletting is allowed by the tenants lease, but tenant never went through property steps with landlord to bring in a roommate (application, approval, etc).  

The lease is a legally binding document and every property manager has the right to charge a fee if the lease is broken.