And oops, all your money is gone because it was actually a bad deal in the first place. 

My partner and I used hard money to buy property and have about 180k in house so far.

Again I'm just exploring my options as this is my hard earned money that I'm spending and I'm not an iron fist person but like to be "fair" and "punctual" with any business.

Hard money is something too scary for me to even consider. 

Why not get FREE MONEY!

Cities will either not be able to comply or select sites that are currently zoned and used for purposes other than housing.This can lead to more complications with lawsuits and other administrative challenges that in addition to absorbing time and money prevent additional housing units from being built.

AVOID syndicators (who will happily take your money).

That said, there other practical considerations with the victim tenant in situation, meaning, maybe it's a "lesser evil" decision to allow the victim tenant to terminate early without penalty based on the circumstances.

They'll likely want you to use the money you're making on the sale of the lot to partially pay down the remaining mortgage since it will be for a smaller remaining amount of property which makes sense to me from their point of view. 

And consider that if they had put the money in a good MM, they would be getting 5+% right now