We were also gonna put the house under our business LLC so that we can get tax write-offs and we would be more protected if something went wrong.

Sure you could possibly get away without it but this is more about protecting your assets. 

Trust is in the writing of the legal document that gets drafted for the protection of both parties. 

The insurance I am talking about is insurance to protect your property such as from fire, damage, etc. 

His agent said he was told he could fight it but I think in the end he has just given up so that's why he fled to another state.I doubt he will try to sell to anyone else, he's a bit mentally unstable but at the same time, I would like to protect my interest in the property if possible, or at a minimum be able to recover my earnest money.

We usually did year-Leases, but since the home has things like older cabinetry and older master bath they keep complaining about and other comments they make, we thought month-month was a good way to protect us if things blow up.  

There is an oridinance that requires the CU report to be issued BEFORE the property is offerred for sale by the bank, but the banks do not follow the ordinance and instead risk the $10K penalty by not complying with this law that is supposed to protect the buyer of a foreclosed home.

I don't think I want or need to allow that as I want to protect myself for any issues identified after they vacate the property.

My questions are what resources do you recommend I use to best educate and protect myself from investors?

I meant, how one can protect (checking title.. leans and etc