Given that you purchased in 2009 (I bought my rental properties in 2011) I assume there has been significant appreciation. Given that it's a rental property, I assume you have not lived in it 2 of the last 5 years and thus will need to pay capital gains taxes on the appreciation of the value. Something to consider.
Have you had an attorney review their offer? I wouldn't necessarily trust the bank or your realtor.
My gut feeling - don't take the offer. If they stop paying, you'll have to sue them and they likely have deeper pockets and can afford better attorneys than you.
Not exactly true. It's true that real estate only goes up slightly more than inflation. But it is appreciating on the value of the property, not what you've put into it.
Consider a property worth $500K. You place 20% down, or $100k. Real estate appreciates on average at 2-3% per year (my rental property is 5% compounded from when I purchased it). Let's assume 3% per year. That 3% is on $500K, so it goes up in value by $15K. But you've only invested $100K, so your rate of return is $15K/$100K = 15%.
Now, 12 years after I purchased my rental properties, they are worth ~$500K. If they appreciate at just 2% this year, that's $10K in value increase. But I only put ~$70K down, so my ROI on my initial investment is $10K/$70K or 14% (excluding rental income or repairs I have put in to them). If they appreciate 5%, my ROI on my initial investment is $25K/$70K or 35%.
Let's say I was living in them and not collecting rental income. I've put about $30K in repairs into them (had I lived in them this would be a lot lower as most of that is flooring/paint from tenant damage). On 2% appreciation this year my ROI would be 10% for this year ($10K/$100K). On 5% appreciation, my ROI would be 25% ($25K/$100K).