That potential option is now off the table, so I would like to sell it and reinvest in a property with positive cash flow.So, I'm looking for a win-win solution here.

You can still win, but the judge will likely give the tenant more time to act than you would expect. 

A corporate entity doesn't help you win a lawsuit, it helps you limit your liability if you lose. 

Looks like Wins all around (Except for the guy trying to squeeze you out, but he will learn a lesson which he SHOULD see as a win if he has the right attitude...).

You don't loose the tenant, no extra $ out of your pocket, and the tenant feels special....sounds like a win-win?

And, as @Suzanne Player suggested, will he entertain a 15 year balloon amortized over 30 years, which would maintain the $600+ savings per month from my initial reply above?

That being said, it's difficult for a new investor to discern the subtle nuances of a solid case involving an anomalous situation from a no-win money pit andlegal counsel who's better st selling than trying cases.

One of the players that helped me track down an owner said they try to collect up to 40%, but if Wayne is correct, maybe he had his states mixed up. 

Wins: House went on the market and had 20 showings in first 5 days.

If you received the winning bid confirmation it seems odd for them to take it away from you.