Depending on the state, you're responsible for the total payoff including the entire outstanding balance, arrears and legal costs. 

So I think they know this and have decided to just ignore our emails and request to pay the outstanding invoice (which they would be getting away with much less than the damages they have caused and put on us). 

Have they informed you of any outstanding requirements?

Know of a Dallas area property manager that's outstanding? 

I'm asking if it's reasonable to sell this note at a 5% to 10% premium to the outstanding balance. 

Historically San Diego RE investing has produced outstanding ROI.  

Thank you BP community for all your outstanding advice!!

The back-up plan is to simply flip the property and take the cash out now for the next project.The Project (2 unit Multi-Family):Acquisition/rehabLand Acquisition:     275k (I'd use my cash to buy)Hard Money Loan:  100k (I might use my home equity line at 4% APR over 20)ARV:                           465k (This is my best assumption based on other comps)Refinance:                348,650Cash out:                  26,250Income:Rent:                         1800x2 (This is conservative)Capex/Maint.          300x2Expenses:                400 (water/trash/electric/sewage/insurance)Using these numbers the property looks like it generates a COC return of about 30% per anum (on the 26k outstanding).

Second, I can't imagine the deposit covers the outstanding $1600 so the problem doesn't go away by giving up the deposit, the figure just gets smaller.2) The late payer.

@Chad Urbshott As I assume you know, any outstanding HOA debt, whether a lien has been filed or not, becomes the responsibility of a third party buyer at a mtg foreclosure auction.