It prevents not only this issue but the case where the tenant claims they own the refrigerator, stove, microwave, ceiling fans, dish washer, room AC, etc.BTW I am tending to believe the tenant mostly because he is indicating the deposit is less than the rent. 

Current construction requires sprinklers, Siamese water hookups in front.

199,000 1150 square ft condo top unit with 20 year old water heater and hvac , one year warranty included , good deal bad deal?

Your innocent intent puts you into the same water as those with less than innocent intent so, just make sure you do what is required so you aren't scooped up in some DA's net.

I tried to use the calculator but still couldn’t figure out what’s bestRent: possibly $1,250/month (3bed/2.5bath)Sale: comps for exact home or slightly smaller recently sold for around $160kWith rent I know there are addition expenses: vacancy- tenant repairsHOA: $25/monthMortgage/Tax/Insurance: $830/month Water: not sure I think I average around $30/month possibly.

If you do this without their consent, you are putting yourself in serious legal hot water.

So after sending a termination of the lease renewal, the tenant refuses to pay rent and has not paid the water bill for the last quarter (usage also increased significantly on the most recent month). 

The main issue I see in the history of the house is a massive water damage in 2015 which ended up around 40k in costs.

Without ever consulting me, in one instant he had the plumber put in an 'emergency' water line in the yard, disconnected the water heater line, a bunch of other things that ended up costing my $5k to pay for services I did not want and to put back together the mess that was made. 

I'm assuming trash, sewer, and water.