Legal Question in Real Estate Law in California

It sounds like you have a breach of contract case against the seller, which may entitle you to a lawsuit for specific performance. If you do not want to sue to enforce the sale, you may suggest having an attorney negotiate a cancellation of the sale that allows you to be paid back for what you paid for the mortgage while escrow was pending.

It depends entirely on what the lease (the addendum) says. Generally, tenants (which is what your sellers became at the close of escrow) cannot simply demand their money back because they changed their mind and don't want to rent the property back. A lease would generally require the tenant (your seller) to forfeit the rent if they decide to break the lease. Even if the tenant had a month-to-month tenancy, they would have to give you at least 30 days written notice that they intend to move out and you would be entitled to the rental value of the property during that 30-day period.

You should visit a real estate attorney in your area to have your documents reviewed to determine exactly what was signed. Only then can an attorney competently advise you about your rights and obligations in your specific circumstances..