If you are unable or unwilling to do so we may elect to terminate the lease and request a return of our deposit--which we offered in a good faith agreement that we would be presented with a habitable dwelling--and our prorated rent.

Furthermore, there is likely an Affiliated Business Agreement Disclosure that you'll need to sign. 

In the future, be very specific about these agreements.

Florida and Georgia have been locked in court cases since Bush II; there are disputes over water rights from the Colorado River where agreements on utilization of flow as measured in acre-feet were made in 1800s and are no longer sustainable.

Which means you are now liable for anything they do.So, time to give the tenants notice to get rid of the dogs or move.If you have them on a month to month rental agreement, you can just give them a 30 day notice to move (or more, depending on your jurisdiction).  

Draft precise agreements outlining loan terms, manage risk by diversifying investments, and build relationships with real estate professionals.

So if the partnership would not be allowed to purchase the entity together and I were to buy it, if we were to force our way down this road, would be to set up a legal agreement beforehand, I would buy the property since a partnership can not, and then the exchange for  ($$ + assigned roles + etc), my partner receives 50% equity?  

You definitely want a legal agreement that's forecloseable, getting as much front money as possible so that you're not just in a lurch with nothing if/when they default, and you should get better interest terms for "being the bank" AND I would qualify the buyer just the same as if they had to go to a bank, because you want to know who your partner is in this deal.

You technically CAN break it up on Schedule E; however, it is not the best thing to do for audit purposes or an actual breakdown.You should have an operating/partnership agreement together and you should have a dedicated bank account for the property.  

The agreement and expectations set up at the beginning of the contracting relationship should be consistently adhered to.