I also look for lawsuits and see what happened in them.

If so SHE is in breach of the lease.The other item here is she seems ready and willing to file a lawsuit over your breach but does not seem concerned about her own.

I really have no recourse other than to file a lawsuit for non payment.

I finally bought a 3 bed 1 bath house that has a mother in law suite attached to it.

If a lawsuit is filed the insurance steps in or the company which owns nothing is bankrupted and you are out the start up costs only.Your business entity should lease from each land trust with a right to sublet.A series or bucket LLC in Illinois will end up serving a plaintiff attorney with a hunting license.

Always avoid lawsuits, however, having an attorney at your side can help this contractor understand that he needs to negotiate his exit.   

Of course I am not an attorney and this will not protect you from frivolous law suits from people that do not understand that you are allowed to...

@Mike McCarthy is correct about lawsuits--anybody, any time, for any (or no) reason. 

I live in California and have a "professional renter" (he is very knowledgeable about the lease and laws and acts strictly within those bounds - I perceive him to be a potential lawsuit threat) in my rental property. 

I have walked through the property and fixed visible things with risk, but I would love to know any attorney I should contact in case I need to fight through a lawsuit when there is a fraud.