After a grace period of 1.5 days give another notice and mention legal action or law enforcement5.

Hello Doug, I am not a real estate attorney nor is this legal advice.Unless someone's state has specific laws banning contract assignments you should be fine doing the following.  

Jonathan, I am not asking for legal advise, I said advise, without the word legal. 

Your client should consult a real estate attorney to draft an agreement with the ex and ensure there are no legal or tax issues, especially since this is an investment property.

Are you a US citizen who understands how things work legally in the USA?   

@Ryan Daniel  I will preface this with the fact that I have a legal background, specifically with estate planning and asset protection in relation to real estate investments.

What is the legal mechanism?

There are some legal considerations as well as practical considerations 1.  

I am not sure of the legality associated with this and the issues of going from 4 units(residential) to 5 units (commercial) even if one unit will only be owner occupied.

This doesn't replace the need for a MSA that will capture additional clauses needed on a Contractor-SubContractor relationship, this is just a project specific form you would use in addition to the MSA (prepared by your Attorney):This template is for informational purposes only and does not constitute legal advice.