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Thank you for your question.
My opinion is that your lawyer is correct. If you get clear title for $5,000 it is well worth it because, win or lose, it will cost you many times that amount to carry a lawsuit to conclusion. And you are losing the use of the property while the lawsuit plays out.
Life is unfair, but you should treat this as a business decision and not let your completely justifiable anger cloud your judgment.
I hope this information is helpful.