I know lots fear a crash will be imminent, I'm in the camp of a correction and in some markets a harsh one. 

He gave me the following options:OPTION 1: $20,000 - Rip up the floor and pour chemical grout in that one area and retile the floor.

A leak that just happened, or seen/caught shortly afterwards, usually does not have enough time to leave behind the chemicals and moisture needed to form mold.Like was said, a small sheetrock repair is cheap to do/fix if you want to test it yourself. 

If you feel they're being too harsh, think about their intent.

These were my first two fire rehabs ever and I find it interesting that melted pex was credited for saving both of them.Plastic leaches chemicals into the water, copper does not. 

So when I have paid rent, less the credit, they failed to contact myself nor the owners and employed these harsh scare tactics against me.

It's about half a square mile of pipes, electrical work, sensors, chemical reaction vessels and towers, storage tanks, etc. 

Most of the Snowbirds hail from British Columbia, Alberta and Saskatchewan and they flock (no pun intended) this area from October - May (to escape the harsh winter months in Canada). 

The penalties seem harsh and I wonder if those will adjust, but they put in things for plumbing out, property damage etc

I wouldn't say the provider is entirely to blame here but their response is a bit harsh.