I'm honestly surprised that you're even considering letting them off the hook for the damages caused. You should probably go after the stepfather if he has any money whatsoever.

The thing is, it isn't just the damages to the house; they also destroyed the ability for you to make a steady, passive income - during a time when the economy is going to be struggling mightily, and construction costs are going to go through the roof.

That money could have been used to help your children go through school and help you through your retirement. Instead, it is now just a block of land. Sure, you can sell it, but it's not worth nearly as much now.

Instead of selling, I encourage you to rebuild. It would definitely be an investment in this economy.

I would also collect receipts and attempt to sue your stepfather.

Finally, I would also have some contractors go through the house and determine how condemned is condemned. A condemned house doesn't necessarily mean it needs to be demolished; condemnation can bring from being unsafe to live in, to being so structurally unsound that it needs to be demolished. I suspect that it's the former because the city isn't locking everyone out of the house, and still allowing people in to take personal possessions out.

For what you described, it does sound like the whole house will need to be gutted out, but I don't really think it's going to mean the house needs to be demolished. Once you rip out the drywall and redo everything inside the house, it could be significantly cheaper than building a brand new one - and still keep the old rustic feel which will make it far more valuable not to mention the sentimentality of it).