Texas Tenant Defrauding Us, Now Discovering Lied On App - Evict?

[Account Closed]

A Texas apartment tenant appears to be fraudulently attempting to extort us for money, with bogus claims of misrepresentation and lack of habitability. Their hapless attorney's demand letter is literally riddled with errors of fact and outright lies and we have extremely thorough records and documentation to prove it. We know this game: shriek loud enough in hopes of getting money without actually having a case.

In doing research in response to their demand letter, we uncovered a criminal background for one of the tenants that was not disclosed on application and did not come up in the original Texas criminal check. Our lease and approval policies make abundantly clear that failure to disclose is grounds for immediate termination of the lease agreement.

So, do we terminate their lease or not? We're not afraid at all at going to the Justice Court on this. We also believe this shows a pattern of fraud and deception on their part in case the larger case does actually go to court. But the worrier side of me thinks it might look prejudicial or retaliatory in some way and be counted against us should the larger case go to trial. Other than this fraudulent demand for damages, they have a spotless payment record.

Thoughts?