If that doesn't happen, they will interplead the funds into court where the parties can fight over them.That said, I agree with @Wayne Brooks ... if the buyer had a right to bail you'll end up losing more than the EMD on this one.

If you want to fight the tenant on this you may very well lose.

Fighting traffic from Fremont to get to So.

People are fighting for rentals I find.

You can get chargebacks on credit cards, and credit card companies fight for their customers not for their merchants.

me thinks cheaper to just do your own quiet title hard to fight big insurance on these issues if they deny the claim.. 

I would be apprehensive on history of bed bugsI would say no if a previous landlord gave me a bad reviewand anyone in the world who threatens me out of some perceived moral high ground in an effort to intimidate me so they can get what they want at my expense, well they are surely to receive only my most vile behavior in return.I wouldn't just turn this person down, I would ask to meet in an empty parking lot and fist fight. but then again, that's just me, and I'm feeling particularly hostile today. real answer: you should pass, and stop communicating with this person

Informed tenants will fight for deduction in rent if there is a problem.

But you are just using estate planning and LLC's to work in the modern era to fight modern wealth destruction (law suits/judgments, healthcare expenses leading to long term care / incapacity, remarriage after death, death or remarriage of children.) 

We are fighting workmanship and quality control issues right now.