My father and I are in a 1031 exchange and under contract to buy a fourplex in San Antonio. (We are already way beyond our identification period so cannot buy something else).

This fourplex is brand new construction and after having an inspection, we have discovered some major issues with the construction. The seller had agreed to do all the work, per our contract, but after re-inspection, it was not done properly, and sounds like it could result in some major problems down the road. Now he is telling us it’s been done already, but is a terrible "half-assed" job.

I have requested we extend the closing date until the repairs are done properly OR go ahead and close but hold back money in escrow so we can do the work ourselves. He is refusing to do this.

I’m not sure what my options are now..if we don’t buy it, we are going to have a tax issue. But we do not want to buy a property that is poorly built and have problems later when we are trying to resell it or our tenants complain.

I feel like the seller has all the leverage now since he knows we are in an exchange. Any advice on my options at this point or how to get him to allow a holdback for repairs? 

We were going to buy multiple properties from him (which I was using as leverage to negotiate), but now that seems out of the question..