Your estate agent and the title company should be having them pay any unpaid water bills upon closing - this should be shown on the settlement statement.

It appears I may get 500,000 settlement in a few months. 

Then offer the creditor a percentage of this amount as settlement in full.  

Quote from @Roxanne Whitaker: Please be aware if you buy an investment property and do not live in MD, when you go to sell it you will pay an 8% tax at settlement. 

Looking my insurance policy it mentions that I can opt for settlement under Actual Cash Value vs Replacement Cost. 

Most attention has been directed towards buyers and buyer agency in response to the agreed upon settlement which introduces the possibility of fee shifting depending on whether a cooperating fee is offered.

A little update with the bank, they are now telling me that they aren't even going to consider a settlement or a short sale unless the past due 14 contractual payments (around 8-10k) are paid.

Settlement will occur throughout the life of a structure, although in most cases it will diminish over time.

The seller had attempted to buy me out of the deal but ultimately realized they had no legal grounds to back out.

The seller hasn’t responded to anyone after the deal close.