I need some advice because there may be ethical & "bleeding heart" flaws in my plan.  

Your professional education requires effort and a maturity level beyond the level of college students attending frat parties or youthful happy go lucky work ethics.

The encouraging investment mantra is just spin.If you value the old Protestant work ethic you should favor taxing it fairly.

The only issue I see here is if for some reason it doesn't pass the test post-rehab, I will then have wasted a considerable amount of money as the liability/ethical issues surrounding its rental or sale would be too great to assume.Any advice here is greatly appreciated!

Do not question my ethics.

I am sure there are, but Attorneys, generally, are ethically limited in their ability to reach out to prospective clients.

The dispute went into ethics committee for the escrow company and will be tied up for a least one week. 

There is such a simple answer (or 3 or 4 actually) but I'm not in the habit of giving advice to people that are disingenuous and not willing to be ethical in their dealings with others.  

If its your work ethic then your not going to find anyone to partner with, maybe someone willing to hire you.  

So unless you made it clear to them that you ONLY want them to find you houses, but never Buyers, then I would say that ethically, you probably should wear the $500 this time - but then clarify your arrangement going forward.