But I also am old enough and wise enough to want to be sure we are protected with all t's crossed and i's dotted (mainly because this is a rural property with acreage).  

I thought one purchased title insurance to protect against such fees?  

If not maybe look into a home warranty to protect you against that old equipment, but 5% works

@Sonny Pacheco, as a CPA, I am not qualified to speak to matters of asset protection and insurance.  

The best way to protect himself would be to do a double close.

If you only lend up to 65% LTV, I believe you are protected.

I know that she will lose her deposit but what other things can I do to protect my investment without being an *** of a landlord?  

Hopefully things go smoothly, and I promise the more effort you put into clear and concise communication in the beginning, the less chance tenant will get upset as a result of unexpected outcomes (like starting an eviction process, if only because you have to protect yourself).Source - years working in real estate.

@Robert D.In addition to @Chris Seveney's extensive explanation, if the property is located in Chicago or just Illinois you've got this to deal with:https://www.domu.com/blog/new-illinois-law-protect...Your assumption is that it will sell at the judicial sale for 40k.

Can you put some sort of contingency on the offer to protect yourself?