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Also, if you paid a $10,000 deposit then I would have thought that should be held in a lawyers trust account somewhere. You say you are out of pocket by $35,000 but if you discount the rent you would have paid to live in a property valued between $700k - $950K then I don't think you are out of...

I am just wondering about what would have happened if the guy hadn't gone bankrupt. I don't know the content of the option agreement but you presumably had an option to buy this property at a fixed amount which you now say was $250,000 over the top less rent paid. Had you actually gone ahead...