PM claims that we were unable to send anything sooner because of the repair delays. 2) Lawyer advised to send an email to see if they'd be willing to work something out regarding the repairs. 

It's a legal issue determined by your state's laws, so you may want to consult with a landlord-tenant attorney to get a good understanding of that before you make a claim on the deposit.

Try and get a Quit Claim deed from the previous owners.

Most, if not all, insurance companies will deny any claim on a dwelling with un-permitted construction/upgrades.

She has stated that she will not file an insurance claim and instead expects my company to be responsible for the cost of repairs.

@Matthew Crane the answer is - maybeAt best, you can claim some of these indirect costs as startup costs. 

The legal description of the lot states these 4 townhouses are 1 legal property (they are NOT platted as 4 separated properties).The realtor I use to appraise the property claim that I would maximize the sales price if I had the re-platted as 4 different legal properties.

Should I tell him to let her inside and collect her stuff or should I let her contact the police and go through small claims courts and stay out of it and leave the old lease intact till then.

He gave me the property (through a Quit Claim Deed) but his name is still on the mortgage (which I have now taken over payment for).

In my case, I own a property that they keep trying to bill me for things like grass cutting and trimming shrubs--they claim they are sending property preservation folks to my house often.