I think you have handled it quite well so far, I agree with everyone about the letter to them and the HOA, or management group. If the dog keeps lunging for you and you Yorkie, I'd consider getting a small thing of pepper spray, and warn them if their dog tries to attack again that you will use it. It is sad that these people have nothing better to do than try to ruin your daily walks. Were you on good terms with the brother when he lived there, if so have you tried to get in touch him, and let him know what is happening? I wish you the best of luck with this and that it gets resolved very quickly.
Cheers Quad
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Assume Nothing, Question Everything, Start Thinking!
RIP Megan 3/1998-5/28/2013