One of them is not moving forward anymore, because there was so much confusion in the planning department there about the new regulations and how are they enforcing them

Are there any laws or regulations on private investing to know about?

A part of me thinks there should be strict regulation in this area where inexperienced investors or those lacking the right tools or are impressionable may fall for questionable marketing tactics.

I'm not sure what the regulations are where the duplex is located, but maybe you can put some pressure on them and say that they either sign a lease or move out.

Hotel and motel owners are pulling strings with the people that make the regulations. 

I heard that state has stiff regulations regarding group homes, especially if the state provides any funding.

https://rsmus.com/what-we-do/services/tax/federal-tax/irs-issued-proposed-section-1031-regulations-for-like-kind-excha.html

I would call the building dept first... then figure out if you can afford the remodel, and all of the regulations. 

If SFR you have a few regulations to follow but nothing crazy like relocation assistance.

I would not offer them a 12 month lease at all.Check the Attorney General sight for the rules and regulations.