harrowing lease option

To identify myself, I live in the home, don't have any legal part of the agreement mentioned, but I am named on a 30-day notice to quit.

Here are the bare bones of it:
Frank was approached by Dick around middle of 1998 with a lease-option to buy a home in Woodside, CA. San Mateo County. Terms: $600 per month, $5000 down. House, as is (I won't go into detail, but there were significant repairs needed)... actual selling price undetermined but assured would be around $600,000. Dick would carry the note for 33 1\3 years with no interest... with a balloon payment of the remaining balance at the end of the 33 1\3 years. His story was that he wanted to afford the same deal that was given to him when he was starting out in the area, in this house, but financially updated.

Frank accepted the deal and moved in Nov. 1998, and has lived there ever since. He immediately started repairing & improving the home. Here's the tricky part, it was all a verbal agreement. When pressured, Dick claimed, "my word is my law", take it or leave it. Frank took it, and upheld his end of the "deal". On Feb 26, 2001 Dick met with Frank and said that he was putting the house on the auction block in two days. This was the first Frank was told that the "deal" was off, and he managed to talk Dick into not auctioning the house and giving him some time to find alternate financing.

Other details that are interesting:
There are several people "witness" to Dick admitting to the "deal" or details of the "deal"

Dick lived in the home with Frank for about a year, without giving any real reason. The first few months were under the premise that he was just tying up some loose ends, and then he just never left.

Dick had made the identical deal with another person. Obviously it didn't work out for the other guy either, I've heard conflicting explanations as to why.

Where we stand today: With the unhappy realization that it'd be very financially stupid for us to purchase this home, due to how much Dick thinks it's worth, & how many repairs still needed. Dick came by today & proceeded to come into the house and take pictures and have a contractor give him an estimate on repairs... "Cause it's my house". And handed a "30-day notice to quit" to Frank on his way out.

So, my questions are: Can we do anything about the verbal contract? Can we fight this eviction? Are we now considered month-to-month renters? And if so, when exactly did that happen? Help!

Thanks

[HomeGuru]

Post too long and personal.