The way to know for sure is to have it inspected, either by a home inspector or an engineer.The next thing to me is the legal situation. 

Good luck- DfThis is NOT legal advice, please seek local counsel.

Question 1: How can I find out who is legally on title, is it the owners name with tax assessor?

I don't have much money to start off with so I can't afford legal fees right now.

Texas wholesaling is very much a thang with the 100 dollar options etc. many of the others states how you guys do things would not be legal.. but I agree with your premise on the ethics. knowing your craft etc..

Let me start with this:in HUD's Single Family Housing Policy Handbook updated in 2015 it says this: (Straight out of their pdf edition on the website) (i) Time Restriction on Transfers of Title The eligibility of a Property for a Mortgage insured by FHA is determined by the time that has elapsed between the date the seller has acquired title to the Property and the date of execution of the sales contract that will result in the FHA-insured Mortgage.FHA defines the seller’s date of acquisition as the date the seller acquired legal ownership of that Property.

The second mortgage was attached to an alternate spelling of the owner's name and for some reason I'm still unable to do a record search by legal description of the property (name) on the Palm Beach Clerk's online system.  

So let's go over this.....We have a lease agreement with our tenants which is a legal and binding contract. 

Real estate is transferred, and identified, by the Land legal description (along with all the improvements on it), so as long as the lot description is correct, it should be a simple correction.

I also just received an email from the buyer this morning stating he is holding out this month's payment and future payments in case he needs them for legal defense.