Current tenant is in the military and is getting deployed so they are going to be terminating the lease agreement which I'm okay with doing however they did recommend a friend that would like to move into the property and they want to take the property as is amd leave them all their stuff and they want to transfer their security deposit to the new tenant  so the new tenant doesnt have to pay it.

You'll want to look in the section headed title borrower initiated termination for all the details.

There's no need to use an entire form for such a simple request.In the future, you could require the tenant to give their notice of termination in writing and include a place for them to provide the forwarding address.

I would notify them immediately and give them the option of terminating and moving out between now and lease termination with no penalty as long as they provide at least two weeks notice.

The deposit is treated like any normal termination.

I picture a HELOC for something like a BRRRR that I can use to pay the HELOC back asap versus paying for it longer term in addition to the cost of the loan.

Would you terminate the guys lease?

We have been warned by the seller that they will pursue legal actions if we ask for termination.

I would wrap it all up with a warning that one more violation would result in termination.

For example, I have house hacking clients who are doing short term in Malibu and the city has a 15% gross income fee on top of their yearly fee.