And yes to @Jailen Holt's question: Do you have any referrals by any chance?

Chances are she will also be leaving as well in a few months or worse case be evicted and at that time you determine how much of the DP is returned to her.  

We wanted to help out a neighbor and give him a chance to earn some side income on this flip.

It is very simple for me to say do this do that and I do not sugar coat that advice but you must be aware that implementation requires experience and skills that not every landlord has...For example when I advise evicting and the response is the cost is too high/give the tenant a chance that indicates a landlord without the experience to see long term. 

But she knew the previous owner was an ***hole just like I knew he was and therefore knew there was a better chance he would be lying rather than me.

Chances are they will both leave. 

Obviously they could be sued for those damages too, but if they can't pay the rent chances are they can't pay for those repairs.  

I have a pretty good gameplay but I would like to hear form all of you as to what your course of action would be.Thanks,Chance 

Let's talk when you get a chance. 

What are the chances the owner paid the property taxes if they didn't pay the mortgage?