So I am a newbie to REI and and have been digging through the Bigger Pockets Podcast archives and found a gem:From Tragedy to Broke to $400,000 a Month...As a newbie things got more crystal clear for me on that podcast.

There was a lot of learning, mistakes, and near tragedies (purchasing a building I should never have offered on!). 

This is a tragedy and makes me shake my head...but on the brightside it sounds like you have a way out of the deal.

However; due to a personal tragedy (my husband passed away last summer) I pulled the post from the forums.

@Scott Ellis, code states all bedrooms SHALL have one emergency escape and rescue opening, the rest of the living space can be serviced by a doorway leading out. also depending on how far down you are you will need a window well that is 9 sq' clear opening and steps or a ladder to get out. you can not just open a door way and say it services the rest of the area, because a door can easily be installed again, and i wouldn't want that tragedy on my head if god forbid something happened and someone got trapped down there. i wouldn't even try an circumvent that one - put the egress window in there. as far as the town considering it a bedroom, i would check with the building department, if its not, then the house is down one bedroom and a bargaining chip for you, you buy it, make it right, and you just increased the value of the property to where it should have been.

I'm 46 and took off 8 years due to personal tragedy.

One only has to look at the recent tragedies in California to understand the danger.Safety is an issue.

I would probably not, I would definitely NOT renew her lease and if she was on a month to month rental I would give her notice to vacate with whatever lead time is required by your agreement, state or locality.Personally, I'd rather have a vacancy than a tenant created tragedy.

It's amazing, and a financial tragedy. 

And I am sure they will be looking to settle with an insurance company, as most people don't have the assets to pay off such a settlement from this type of tragedy.