And once they get away with saying no to a measly $25 increase - you can bet there will be more demands because you just increased the size of their cojones exponentially by bending to their threats.I speak from experience here.

Mike MoRo,a 3 day pay or quit notice is the wrong notice to send unless you want her to stay.You want an attorney to post a get out in 60 day notice immediately so you can get her out before September.This should have been done the very first day you bought the property so she would have been gone before August.Call a number of attorneys who specialize in evictions and you will find one who will get it done for $800.00,not $20,000.Don't try this without an attorney for the first time because something will go wrong and the court will side with her.Remember,California is the biggest anti-landlord/pro tenant state in America and the courts will bend over backwards to help tenants stay in the property rent free for even the slightest mistake committed by you.

It only cause you grief to try and bend the rules "Just this once". 

Don't feel you need to bend over backwards to accommodate these applicants.  

I would think the two primary areas in my region are the tri-cities and bend.

Assuming the PM isn't going to bend the rules.I'd set up to get copies of the bills, or notifications if they get past due, if possible, and put a clause in the lease that says it's mandatory the utility bills are paid on time, and if they are not, it would be a breach of the contract and they could be evicted.You could have the utility company notify your manager, I suppose, of overdue bills, and put in the manager's contract that they are to give a 3 day notice to pay the utility bill or quit as soon as they're notified the tenant is behind. 

In the long run, bending over backwards will frustrate you and may even turn you off to landlording especially if you are living with tenants.Tenants either have the money to pay you or they don't. 

How far do i bend before I'm doing myself a disservice? 

I think you should save your money with regard to calling your lawyer, and maybe wait to do that if there's a problem getting the paperwork corrected.I commend you for not bending to the demands of all of these lenders to assume the loan over the years. 

Wear the "property manager" hat and make the hard calls5) Never "bend the rules" or make exceptions