Is it limited to the amount of entitlement I have/can recover?

How have you recovered since that bust?

You can check your state landlord tenant laws,, but if you choose to remove the unit from rental availability you then would have no course of action to recover lost rent up to the date you stop advertising that it is for rent..You can't just choose a length of time you think they should be responsible for if you take the property off the rental market.So your chances of getting a dime from them is like POOF.. not much.

Considering it already has a tenant and rent is $540 a month, the 19k would be recovered in less than 4 years and that's with factoring $100 a month towards Capex and repairs (combined). 

You can deduct any expenses you incur for maintaining and managing a rental property as well, but the initial cost and rehab investment is depreciated over time (not taken in a lump sum deduction), until you've recovered the full cost basis of the property or you sell it. 

I'd like to figure out the best way to recover the additional expenses (since water is now free for me and the tenants). 

Problem is greater if it also involves contamination of ground/well water for the property, which can make the job hit $100,000.Besides the testing, excavate the contaminated soil, recover pooled oil from the area, other biological or chemical additives used to help remove oil contamination.

I think you can apply to recoup the money from a state run fund, but there could be significant time to recover the money.  

The overall economy is strong and likely to get stronger as some key Latin American countries recover from their crisis, mainly Brazil actually.

If you don't like the numbers you see, invoke the inspection contingency, back out, recover EMD, move onto the next potential deal.