Let's see how much Mr seller enjoys the city making him tear it all out and replace properly! 

Proving what was in his mind is rather difficult.You'd probably do better suing the Realtor for his failure in his due diligence as the matter was disclosed but he failed to properly advise you and have it checked, that's why he may be so passionate .

You now have to do disclosures when buying or selling etc. that you are licensed and make the proper disclosure for your state.

Many investors are (rightly) afraid of dealing with foundation issues so it can actually be a profitable niche once you learn what you're doing -- and if you have a super competent foundation repair company that you can work with.Some end buyers will be leery of a place that has had foundation issues, even if they've been properly repaired.

@Sam McClellan The Pro's... you get your place inspected once a year which keeps you and your tenant on top off things and most if not all of the rent is paid consistently by the government.The Con's... most landlords think they don't need to properly screen Section 8 tenants, for some reason they think the government has already screened them and this is far from correct.Screening is highly, highly important, with or without Section 8... that's the key!

One thing about older properties is that if they're not properly rehabbed it will be a headache for you, especially if you're not close to it.

If so, what would be the proper way to do it?

Can I come back and say 'sorry mr seller, I'm not able to acquire the proper financing, but I can rent it from you for $700/month and I'll buy it from you in a year'?

I think he just cut corners, didn't install  proper weed barrier do didn't make it 3" compacted so stated in error contract.I didn't ask for references (my mistake) and I believe the license number was on the contract, I will check tonight.  

You need to have a 506c offering and proper securities documentation.