Second, I cannot believe you are actually entertaining the idea of continuing to allow this person to live in your office, destroy walls, and destroy company equipment. Are you nuts?
I wouldn't say OP is "nuts" rather maybe he isn't ONLY prioritizing his business bottom line. I think OP's willingness to go out of their way and deal with this "odd" situation is really giving and beautiful.
With that, OP should be wary of making Jake your ONLY priority. People need help and opportunities and I wish our community was more willing to give, but it doesn't have to be at the FULL expense of the business or OP's emotional health.
So OP is most definitely not nuts, but should also just make sure to have his own mental/emotional health as a variable.
You could say that OP has violated their lease agreement, but OP might say that our society has failed this employee. They're both issues that should be fixed. I don't think it's reasonable to say that OP is nuts for having a different opinion than you on which issue should be fixed first.
OP is not just risking the lease. He or she is risking the business and the lives and livelihoods of all the employees.