Need help with tenant breaking the lease

[Cathy L.]

We rented out our house 2 months ago (We had 3 applicants we chose the one I thought low risk but turned out total nightmare). First month we spent close to half month rent to fix things they requested. Starting second month there is another list. In the middle of second month The renter requested to let out of the lease because of several issues :1. Carpets look great but when getting down hands and knees it smells. 2. There are spiders in the house. several other petty issues.

We finally found a next renter now he wants us sign the following before he moves out: 1. 

(1) That they be let out of their lease effective on their exact move out date;

(2) That their deposit be returned by exact one month of their move out day.

(3) That their rent be pro-rated so that they pay only through their move out date for the month,

(4) That no action is taken against their credit.

He asked a lawyer (not litigation yet) drafted this document to sign. The lawyer threatens litigation.  Should we sign?

We do not want to sign this but I am stressed out about litigation. He is late on rent this month too. He is a bully and I really want to kick them out or fight back but again hate litigation. Any advice is appreciated.

Thanks