Now, over a year and a half later, he sent a certified letter last week demanding the security deposit or legal action within 30 days.Please advise. 

You should consider consulting an attorney.I've consulted an attorney, they usually like to handle the case in court and not advise on intricacies of how to negotiate a cash for keys arrangement. 

They’ll advise you on what moves you should make so you can make the best possible decisions throughout the buying process.Bottom LineThe key to a successful homebuying savings strategy?

If not, I would advise researching this strategy.

They have a liability for a full value of my property plus I make them have personal property for $30k. is it advisable to have the insurance underwritten with tenant and my name on it?

good luck Thank you for the advise. 

Please advise!

I advise all of the people that want to buy another property inside of a year to use a Wally Wrap because they write a wrap around the wrap so that the seller has an asset to show their next lender.

A guru called this gator lending but I would strongly advise against borrowing funds for a down payment.

@David Lewis:-) I advise most of our members to read "Acres of Diamonds" then let's have a discussion, if you want?