I'm active in the Miami/Fort Lauderdale markets also, and deal with quite a few low income neighborhood properties - Miami Gardens, Opa Locka, Little Haiti, and others...I'm happy to assist/give an opinion anytime, and this is a great website!

You did an excellent job, but I bet 99.9% of first flips go OVER the original budget. 

I'll bet that the Federal Government has probably spent millions of dollars in research and determined that people will continue to die owning real estate and leaving money messes for their heirs to clean up.

Any time you pay a person over $600 you are supposed to 1099 them.  

They will keep the EMD.However, in the Fannie Mae addendum, there was a paragraph, drafted by their own lawyer, which states that either party may cancel the contract at any time if there is code violation blabla.I called the listing agent and ask him to check the addendum himself with Fannie Mae lawyers.

Please feel free to contact me at any time, if there is anything I can help you with.

http://www.biggerpockets.com/renewsblog/2013/08/24/real-estate-agents-working-with-investors/I just sent her an email inviting her to lunch, and you can bet I'll be encouraging her to sign up with BP AND providing her this link.  

I bet if you find the right partner this can be very lucrative mutually! 

I think my best bet is to just send it to collections as you suggested.

I'll bet she doesn't have the money to send the security deposits to you.