Currently under due diligence and the day of the home inspection we find the tenant left the water running in the kitchen and up stairs baths causing water to flood the basement unit (duplex) . House already needs about 20k in rehab to get both units rented.

What should I do any recommendations this would be my first rental that was not my primary residence?

Also dont close unless that TENANT is booteD out.............lol.  Bad Hombres do things like that.

The sellers obligation in a typical contract would be to deliver the property to the buyer at closing in at least as good a condition as the day you reached mutual agreement, so assuming they are keen to close the seller is on the hook to complete the repairs before closing or lower the price to cover your cost to remedy.  It's the sellers property, tenant, damage and problem all the way up until closing.

Yes, that would be a must have. Or at the very least their insurance should fix the damage, BEFORE you close.  I know that will delay things, but if they don't fix it before, it will be pulling frog nails to get it done after.

Personally, I would also want the tenant that left the water gone when I close. That will be harder, but might be possible if there is a clause for it in the tenant agreement. (Might not be legal though, so check on that first.)

Thanks everyone for the help within an hour after posting this cry for help the sellers had a professional emergency response company there to get all the water up and prevent any mold with commercial grade dehumidifiers and fans. They are saying they are just going to demo the entire lower unit and fix it but my agent and I are requesting a written letter showing what exactly they are going to fix. They have been very responsive and the tenant was out already on the Nov 2, they never sent anyone after he left to verify the water faucets were off befitting turning it box on for due diligence. So far so good