Properties are in great condition with stabilized occupancy and are located in “B” class area. 

Seller agrees but with a condition - 50% off original commission.

Adjust for current condition.

Or do I have to let that fall under the security deposit forfeiture conditions?

Is this unit in top market rate condition? 

As to terms and conditions, you'll negotiate the various conditions you normally would with a seller, such as earnest money amount, closing dates, due diligence dates and any other special conditions.Most real estate attorney have addendums to standard P&S contracts, namely, the contract is not assignable, and is the first item on their addendum, otherwise standard contracts is assignable by default.

But nonetheless, its your insurance company's job to go after the neighbor's insurance, or the associations, etc. to return your unit to its pre-loss condition.

I'm sure there are other ways to do it but weather its right or wrong...

If they're all on-time, paying tenants that have kept their units in good condition, there is no reason to upset any of them more than you have to.

They're paying $650, market rent is $800-900, which I was OK with due to them keeping the apartment in great condition and appearing to be good tenants.