Once we found out about permit issue, we decided to terminate the agreement due to material information was omitted which if we knew it, we will not even submit an offer.

Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.3.

@Irvin Nguyen, what is the stated termination date of the current lease?

Between the rent premium they’re paying you, the family's furniture rental, their fees, etc the family may have very little insurance money left at the end of the agreed lease term. In

Wouldn’t do long term in X y or z market.

Otherwise, terminate their lease and start with a new tenant at market rate.In the future, consider adding something to your lease that says tenants can expect an annual increase every year of up to 5%.

"You may run your daycare business and here is your 30 day agreement termination notice."

I do not know the rules where your property is located, but terminate his tenancy at the earliest legal opportunity. 

-Insurance okay'd the purchase of the house, but right after closing, threated to terminate coverage unless a 80' mulberry was removed from next to the house.

Hire an attorney now and start working through the attorney to terminate and evict, if necessary.