Malfunctioning meter.You can rule out #3 by asking your PM if there have been any showings of the property around the dates of the high water usage.

We are each 50% owner/managing member of our LLC.

If the condition is just too bad for this, and rules & regulations prevent this, consider #2.2) Seller Finance with a reasonable down payment and carry the note for the difference. 

However, in addition to the new tax, the new rules are very restrictive on those that were following the model of renting out multiple bedrooms in their homes as the number of rentals on a property is now capped based on zoning. 

You should read about the 70% rule and see if it applies to your situation. 

Typically for deed prep $50-max $100, + recording fee.

I was also considering if I do sell without a 1031 I could request 50% of the sale price this year and 50% in Jan 2019. 

One option is to purchase a new fridge for the tenant (I buy mine at the Sears scratch and dent store because they're often 50%-60% of the price of a new, undamaged fridge). 

This is due to a special rule under Revenue Procedure 2002-69 that states that a LLC owned by a husband and wife in a community property state is also considered to be a disregarded entity and for tax purposes, the property is treated as if it is owned directly by you and your spouse.

He said we he would split it with me 50/50.