She has no case.She illegally subleted your property to an unauthorized tenet and profited from that action.She will lose immediately either in small claims court or a preliminary hearing.Don't lose any sleep over her crap and refer any additional communications from her to your attorney.In the meanwhile,I would start to eviction process with the current occupier of the property.

Unless he specializes in landlord/tenant law, I'd wager that most knowledgeable landlords have a better immediate grasp of those areas of the law than he does.

Look at this situation like a poker wager.

We went in yesterday to do a preliminary inspection, take some pictures, and change the locks (we will put in new doors later).

Preliminary research points to the possibilty that I might have to replace the floor and even the sub floor.

from preliminary screening they had a foreclosure for about 160K property that ran for 8+ years.

I will confirm utilities are back in my name tomorrow but I would wager good money they are. 

I think we both know whats right for us, though due to your experience I'd wager you know a little better.

You can reach out to Helen Caverson at Caliber Home Loans here in TC, she could run some preliminary numbers for you.

Given it's small town, I typically do preliminary online search-  Sometimes I find that the owner is actually in real estate, but in a different state where they live, and also potentially not specifically in residential real estate.Is it worth sending a note to these types of owners or better to avoid?