The purpose from an insurance company stand point it is to protect themselves.

In the turnkey world there are no such investor protections. 

If you're going to place a lien on the house to protect your interest, you're still in a 2nd or 3rd position. 

Without a security deposit you have no protection or at least a cushion to bridge the gap if/when they default or trash your place.Personally I would hold off for a better tenant apllicant.

Not the way the broker should have protected your money.I am scared to ask, but do you even know if you have a first lien on this asset?  

I can tell you I would never accept our contingencies from another buyer which include: - Due diligence starts at receipt of bank approval letter- Earnest money due within 7-10 days of receipt of bank approval letter- EM held by our attorney who also must close the transaction (difficult when another attorney is handling the short negotiations but there are ways to structure it where they still get paid and our attorney closes it)- Property is vacant at least 24 hours prior to closingThese contingencies help protect our earnest money in the event values during the time it takes to get approval.  

Are they protected?  

The federal government has established fair housing standards and lists protected classes.

2) how do I protect myself (as far as what type of documentation should I demand to see, what should I be named on, etc.)?

I got to the point where i didn't even bother to look at the property since the cost didn't justify the added layer of protection.