If we ignore the possibility of retaliation, I believe you would be legally obligated to pay her for services rendered, and would have to seek legal recourse for anything she cost you.If it was me, I would pay her (perhaps offer less than she claims she is owed), but make her sign a statement saying she has received payment from you in full and will not try to get any more wages from you.

I’m sort of just gathering opinions and trying to render a good and fair decision.

BUT, only a licensed attorney can render an opinion of title and explain matters of title, contract law, and what the documents mean.

It was render unto Caesar what is Caesar's and render unto God what is His.

Could this effectively render my deal not feasible?

Hey Mark, I just came across your post - I run a virtual staging and rendering company here in New York. 

-The above issue could be rendered moot if you have enough operating and administrative costs of maintaining a large portfolio of rentals.

@Bridget Smith-Osbourne It is inappropriate to issue a 1099 to a shareholder (or owner) of a S Corporation for services rendered.

By and large many people starting out do not need the tool yet, and as you've pointed out the expense and paperwork associated with it renders it a sledgehammer when you need a normal claw hammer.

{Note: in the Agreement of Purchase and Sale we use, such a material failure to disclose would render the contract void at the buyers discretion}.