I wouldn't dream of asking the agent for a reduction.  

also how could it be made legal, if possible somehow, to  include in a month to month written lease, that reduction of income by 50% or greater and/or loss of income for more than 2 weeks must be communicated to owner in writing and either such event understood as the equivalent to a 30-60 days advance notice of moving out (to hopefully a cheaper apartment for their new lower income situation)?

you're not going to get any money in court that you're not entitled to. 1. you need to file for rent escrow in district court, if you leave the house without doing so, your landlord will argue that you have broken your lease. you have signed an agreement and until it is terminated by the court, you still have it. further, if your landlord solves this issue, you will not necessarily be able to break the lease. 2. the only compensation you will be granted potentially in court is a. court costs b. hotel costs c. reduction in rent owed (could be reduced to nothing until problem is rectified).....if problem is not rectified, lease will be terminated by court.  

If you can negotiate with the seller that the seller either get them out, or subsidizes the difference in rent you need with a price reduction that will get you through the end of their leases and into spring? 

See also http://www.rhaonline.com/SEQUESTRTION-REDUCINGHAPC... for one example of HAP contract rent reduction.

When analyzing a property I put the rent reduction into the numbers before buying.  

Although the home is currently turn key I'm waiting to see if anyone from this forum can suggest a plan for a possible reduction in loss.

But, I think on average, 10 hours a week would be fair.So, I vote for a rent reduction of $800. 

Netting out closing costs and the second note holder comes close to breaking even.If you think you can get this house for $100,000 (ish), that would require a LOT of debt reduction by both the first and second note holders .... probably something that they won't do.  

Worse-case scenario is that you have a higher tax bill this year from the additional income, but a lower tax bill next year from the reduction in income (since half of the year's income was recognized the year before).