Tenants not getting along

[Melissa Gunther]

I am having trouble with tenants that do not get along in a duplex. The upstairs tenants complain about anything and everything that the downstairs tenant does. From noise to parking her car too close to their stairs. The list goes on and on. I notify the downstairs tenant of any complaints and advise the upstairs tenants to call the police if they think a noise ordinance has been violated. The police have come out and nothing came of that. Now the upstairs tenants are threatening to sue us for not doing enough. We do not have a property manager and live in another city so we cannot monitor things 24/7. We are not sure what to do. We have never had tenants threaten to sue is before. We offered to let them out of their lease but they want their deposit back + one months rent so they can find another place. What would you do in this situation? Thanks for your help.