Perhaps my son being one of the tenants will help to mitigate the damage?

This can help mitigate potential damages down the road. 

Thank you, and thank for details advice, I really like have no option period, in some of our offer, I think we should have done that, since we don't see much issue with the house except cosmetic, and even though there were issue with foundation and plumbing, they have been fixed with high reputation companies and with transferrable warranty too.

In addition, habitual late payments over the grace period can result in eviction which is very damaging and expensive.Bi-weekly rent is $225/biweekly period = $5859/year

Insurance will cover damage to their possessions, but you are talking about inability to use the apartment, not their possessions.Lack of water/sewer service means the apartment is uninhabitable.

Mind you; there are no physical damage to the garage door itself.

This contractor was recommended to me by my real estate agent, so I trusted  he was reputable.

Quote from @Brynn Walden: Hi,I will be completing multiple 1031 exchanges over the next 24 mths ( starting in June of 2024 ) and I am primarily interested in passive real estate investments as I am easing into retirement.I have a 30 plus year history of active real estate investing and management.Does anyone have recommendations for sponsors/syndicators/financial advisors that are reputable and have verifiable track records?

Their choices are: 1) Take you to court, which if they didn't follow their own management contract, won't work out for them.2) Try to put a lien on your property, which you could sue them for damages and attorney fees.They sound very incompetent if they did work without your approval AND without upfront funds from you.

Almost all reputable property management firms have strong indemnification and hold harmless clauses as part of their management agreement.