1. Up to you and the tenant. Either ask them to move out, or sign a new tenancy.

2. You should know what you want, no? You can do both, again if the tenant buat bodoh, there's a separate thread for this.

3. If you're the tenant, do you think it's fair? I think life's fair, however unfair we perceive it to be. So be fair to the tenant also, claim the deposit from the vendor EARLY EARLY. In auction property, it's the cost you have to bear. And if tenant don't agree with the TA, why keep them? You're not that desperate I'm sure.

4. This is an interesting one. Usually if the tenancy is signed by the embassy, and not the employees at embassy, they have their own agreement, which is like plucked from the TA in mars. On the other hand, they are excellent paymaster. Sieve through the TA, and I won't worry too much on the "many contingencies" they put in there, things which MAY happen, but NOT likely. Up to you.

I sure hope the tenant you mentioned in 1-3 are not from 4 

Good luck,
meejawa