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She should also file a report with the police for identity fraud.

There are places here where you can buy a house that makes sense as a rental, and other places where an identical house won't work.

@Brandon Stiles the process steps are identical - how you execute them is different.

Thanks Michael, it's good to get that additional verification.

The person John Smith, would need to provide a "certificate of Trust" this is the document that legally gives him the power to sell or do any actions of assets the trust owns.. which in this case is this piece of land.. one reason may be that the taxes aren't paid is the trustee does not have sufficient cash on hand to pay those and is waiting for as long as possible before taking out a loan or sells other assets to cover the taxes.good luck,  If the trustee can be located you can submit an offer and see what can be done but get verification, the "certificate of trust" that authorizes him to act on behalf of the trust. 

Check your purchase agreement usually the security deposits are transferred from original owner to you.this should include interest from the date of their move in. if not get the agent to figure out how to get that done.as @Ryan Murdock suggested a estoppel helps in getting verification of rent and deposit that the tenants have..I'd keep tenants on the month to month term as soon as you can give them new lease to sign with the rent increase. 

Contact your own attorneys for verification regarding contract law. 

in short, I think you can find a decent investment property anywhere, but there may be fewer opportunities in smaller cities and require further due diligence and rental verification.  

@Joy Jones - It seems possible but I think the fees and taxes will outweigh the benefits.FHA has specific rules about "Identity of Interest" non-arms length transactions.