Double lease, how to get rid of current tenant?

[Bocondo Williams]

I am in little bit of mess right now... We bought this property where tenant was already in place and we assumed current lease. Soon we discovered tenant have pest issues in the property and also had history of paying rent late. During my discussion with him few months ago he mentioned he don't want to renew the lease. I also don't want to renew his lease. I felt the feeling is mutual and we have no issue at renewal.

But I made a huge mistake and did not read the lease completely, it had a auto renew option if written notice is not given by certain date. We showed the apartment to future tenants and signed a new lease starting from Aug 1, 2023 and then sent notice to current tenant that their lease will not renew. In response he referred to the lease section which talks about renewal and said the lease is already renewed also the rent is $200 (10%) lower than market rent or new lease we signed.

I know this was a huge mess created because of my negligence and not giving him notice by deadline, but what can I do at this time?

Option 1: I challenge the lease renewal and say we have a policy of giving notice 90 days before lease expires and since current lease is not signed by us, it does not apply to us?

Option 2: Accept the lease renewal, but since he is trying to play dirty, I become really strict Landlord for him and find a way for tenant default and terminate the lease?

Is there any other options?