Closing pending due to zoning/use issues

[Brian Munn]

I've been following the forums and listening to BP podcasts for some time now without weighing in on anything, however at the moment I find my self in a situation that I believe I have the upper hand in but would appreciate some advice.

I have under contract a home that was in its past life a commercial property. When I came across the property originally on the MLS it was listed as a residential home. I viewed the home and decided to make a offer, which was accepted

However when we got to the original closing date things took a turn and it was discovered that the home had work done without permits and the zoning of the home was not residential. At this time we extended the closing date multiple times, to allow for the owner to get through the necessary process to get the zoning and permits sorted out, with terms for them to complete work/process. 

The issue has now came up that it's going to cost the owner a significant sum & time to complete and they now appear to be leaning toward wanting to void the contract and sell it to another buyer. 

Is this a valid reason for the owner to void a contract? or can I stay the course and push this through due to the fact that completing this process was part of the terms of the contract?

Thanks and look forward to hearing others thoughts on the situation.