To really fix it, you'd probably have to add/replace a decoupling membrane under the floor tile, or fix a weak subfloor.

Tar paper would be an acceptable moisture "membrane" as long as it is installed in a shingled fashion.

The roof decking over L's building is covered with a waterproof rubber membrane.

You might be able to get away with going over hardwood with special manufacturer's products that *could* be used without warranty (isolation membranes) , but very likely your tile is going to crack regardless.

If you go with a tile I would put down a crack isolation membrane to help keep the tile from cracking due to deflection of the floor. 

Every roofer wants to do it different (pvc membrane) so it is difficult...the house will never be worth more than 75-85k.

The membrane applied to the entire roof surface protects the wood against moisture, and the ice and water shied in the valleys and along the perimeter prevents damage from possible ice damming.

In order to fix it, it is likely the contractor is going to suggest everything from digging down and installing drain tiles, sump pump, membrane wrap around the foundation.

Don't cut corners just to save money in the long run, or be the guy that uses drywall with no waterproofing membrane in the shower.Again congrats on your closing tomorrow.

When you renovate, even with carpet, make sure you put down an acoustic underlayment (rubbery membrane), and then carpet.