Set a good example for your children because when they get older, they will model your behavior back to you.

What I usually explain to tenants is I am not responsible to control pests that are potentially caused by tenant behavior and I don't control the outdoors.  

Do not reward bad behavior.

If she acknowledged, in writing, or by her behavior, that she got "notice," then she got notice.  

Reporting suspicious behavior is not only ok, it's your responsibility.

So in other words you are rewarding bad behavior, and then when they come to us, we have to deal with it.  

I know that I am loosing money on the occasional bad guys but this is way better than loosing money on 50% of my rentals and the bad tenants get reported to the courts and hopefully when the next landlord checks their background he/she will not rent to them so they'll pay for their bad behavior.

Learned that the hard way.Plus, a co-signer does not guarantee good behavior.  

I will say this though, from a long term perspective I highly encourage you to work this out and find a solution BEFORE this behavior involves you.

In fact, I believe your attorney is required by the bar to report him for unethical behavior.