Highly recommend getting in touch with a good landlord/tenant lawyer that specializes specifically in CA. 

Based off our lease agreement, my lawyer says that it is the responsibility of each tenant to repair their own space.

Definitely check in with your lawyer to make sure everything’s above board, but these steps should help you handle the situation while keeping the tenant relationship intact.Hope this helps!

It has always been dictated by my bank or in 2 cases by my lawyer when other people were involved. 

I need some guidance with this one before I just reach out to a lawyer.

If the landlord was aware of his past, yet rented to him anyway - any lawyer worth their salt would make a nexus between those two pieces of information and create a liability claim.In addition to the extreme negative press you would get, it also takes time, money and energy to defend a lawsuit you will eventually win.

File Bankruptcy and fix your house up and sell it or sell it as is for the amount you said it was worth vs what you have it under contract for now.  4.

I used several lease templates that I found as a starting point, then created custom leases for my properties from those, and had my lawyer review them.

I'm not a lawyer, and you can speak to an attorney about this, but in my experience people are typically thinking that putting their property in an LLC "protects" them. 

I would consult a lawyer and listen to his advice but where I would try to direct this is the lawyer write letter to HOA that they do not agree with the HOA interpretation that the current CC&R does not allow STRs.