I just posed this situation to my husband (who is a lawyer) and his immediate reply was "Wow - that's a bar exam question"

Basically, you should probably ask a land use or property lawyer who would specialize in something like that to know what the law is in this case. There are property questions and landlord/tenant questions involved here, as well as the contract question, so it's a very complex situation. I'm sorry that I couldn't be of more help.