I would also get legal advice with my own attorney for piece of mind.

I called the tenant and we had a conversation and she understands she is legally bound to the lease, she is also aware of the clause in the lease that states should the lease be broken there will be a financial penalty.

The attorney who drew up the contract said he would write them a threatening letter for 300.00 asking for the proof of insurance, but if they continue to ignore the request I will be out even more legal fees. 

If you insist on getting your $5,000 when you aren't entitled to it under the law, and the taxpayer has made an issue of this, then you could be sued for refusing to let them redeem for the legal amount. 

Legal residents of other states are not required tofile a Georgia tax return if their only activity for financialgain or profit in Georgia consists of performing servicesfor an employer as an employee where the wages forsuch services does not exceed the lesser of five percentof the income received from performing services in allplaces during the taxable year or $5,000.3.

If I buy a Forclosure in Florida to Live In while rehabing and then plan to sell, is there a certain time frame I legally have to hold onto the property?

I could lease it from her for lets say 2 years with an option to buy when the legal / title ownership is all in her name.

At that moment you can still walk away from that tenant without any legal issues.  

This is in addition to the legal fees, servicing, FPI insurance, etc. 

Is anyone aware of legal issues around asking what their plans are for income once the baby is born?