My quandary  is what to do if the tenants cannot resolve it themselves.P.S.

If not, I'll end up getting a short term (6 month) lease on an apartment to scope the area and wait for better opportunities.I think I'd honestly MUCH rather rent to a military member if only for the reason you listed, I'm almost guaranteed to not have any major issues that can't be resolved with a call to their First Sergeant.  

Any suggestions on how to resolve this issue?  

Once the issues you've had ultimately resolve, however that may be, I think it will be beneficial to others if you share your full experience, including how that warranty actually worked. 

It creates a cloud on the record title that will prevent sale of the property until the dispute is resolved.

Since you requested the tenant remove the dog and they don't find that acceptable, they simply want to leave which I think is probably the best course of action to resolve this.

The OP was made with the thinking that notes were where I wanted to go.I'll keep my ears open for other strategies that are compatible with my lifestyle goals, but I think it's time for a deep dive into notes.Thanks for a very confirming comment!

I have property management in place so most of my time is spent on paperwork, accounting, admin along with resolving occasional issues with PM.I spend 10-15 hours per week researching new properties and markets.

What it says about the seller is if there are any outstanding dues, or fees that the seller has not paid, as well as any deed restriction violations that have not been resolved.  

I have seen other members post that they have had reductions of 15-90% once the issue has been resolved.