If they pay before the court date is set, then I would say it is a judgement call on your behalf whether you choose to dismiss their case or not.

If an eviction is pursued and/or judgement obtained (within the lease period), they'll both be on the hook (I believe).  

You might be able to get a judgement against them, but collecting on that judgement is a completely different story. 

And, do you have enough insurance to cover it or will you need to start selling off your assets to cover the judgement?

He rented the equipment and everything and the joke is that he was down in this huge huge huge hole and it started pouring rain and it became this big mud/death pit and he got stuck down there.

I live in a desert area where it doesn't often rain.

He clearly wasn't interested and cooled considerably.Anyway, I like to plan for everything, and if it goes to auction, it would be a good deal of it can be had for the judgement amount, as a flip.  

For you US people to get what I'm talking about: Oslo is more like San Francisco or Bay Area, with more money, better climate and quality of life, while Bergen is more like Phoenix (just replace the crazy heat of Phoenix with rain every day all year round except from a couple of months during the summer).Rental yield will be a lot lower in Oslo and it would be more of a speculation on price appreciation, while Bergen would be more of a conservative bet with higher yields but prices appreciating a lot slower (Oslo: 15-20%, Bergen: 4%).The most practical would be to invest in Oslo where I live so I could get some economy of scale, but then I would lose the diversification bit and could potentially be really ****ed if the market turns too soon. 

A monsoon might generate an inch of rain in 15 minutes but with the overall rain gauge running close to 8 inches per year we are pretty dry, hence the desert.

Additionally, I would have a title search run to make sure there are no other liens against the property or judgements against the owner.