The tenant was taken aback and he said that he thought a month to month agreement only gave him the right to terminate, not a bi-lateral right.

The Investor-to-Agent relationship is a bilateral one, no one appreciates having their time wasted or monopolized. 

You're really doing two things here.  1) You're cancelling a previous agreement in a bilateral contract with mutual consent.   2) You're creating a new agreement, exchanging good and valuable consideration of rent and home via a new contract. 

They use to be one of my favorite strategies, not anymore.No, you can not assign any financing contract without the consent of the seller-holder of that contract, bi-lateral contracts may not be assigned without consent.If a buyer under a contract for deed wants to sell, they may, the transaction is treated as a sale with an underlying mortgage to be paid off.

This has to do with basic contract law, bi-lateral and uni-lateral contracts, a financing agreement, any agreement where a seller extends credit is a uni-lateral contract which may not be assigned by an obligated party.

Read All Of This Please Entering a contract with a financing arrangement turns your unilateral sale contract into one with bilateral agreements, you can not assign a bilateral agreement without the consent of the seller.A subject-to sale is an installment sale by the seller, you make payments and when the debt is paid off,  you clear the encumbrance with full title, the seller can't convey full title until the debt is paid. 

That is a bi-lateral contract that you have to perform and they have to perform. 

So we have a bilateral sale agreement on a foreclosure that has no contingency for selling my current house.

@Justin Case Trading with ISOs does share some similarities with derivatives trading, but bilateral trading is another animal altogether.

The main point is that a lease is a Bi-Lateral contract.