Sellers did not disclose illegal work with no permits

[Sarah Bien]

Hi investors, 

A good friend introduced me to Bigger Pockets because I just bought my first two-family house this past July. I am now a huge fan and listen to the podcasts everyday on my commute to work.

Less than a month after I purchased the house I received a call from the code enforcement officer. He wanted to meet with me to show me the violations on my second floor unit. He said the attic was illegally finished with no permits and it is not up to code.  Since the attic is no longer a livable area it cuts my 2nd unit square footage nearly in half.  In addition, there is no longer enough livable area in the unit so one of the bedrooms has to be used as a living room and I have to put a door on a little passageway area and use that as the 2nd bedroom. I will now lose money on rent with the smaller square footage.

The code enforcement officer said he mentioned these issues to the sellers and the sellers' agent. He said that the sellers told him they would fix the problem but they waited until I closed on the house and never fixed the issues. I was not informed on any of the illegal work until after I closed. 

The code enforcement officer, who is also a contractor, said he estimates that it will cost between $10,000 - 15,000 to get the attic up to code. My attorney said I can spend the money to get it to code then try to sue the sellers to get my money back.

I am not attracted to the suing option so I am trying to contact the sellers but they live out of the country. Should I try to contract the sellers agent as well? Is it also the sellers' agent's fault for not disclosing this information even though she knew? Both the seller and the seller's agent signed the affidavit of title stating "we have always obtained all necessary permits and certificates of occupancy."

Has anyone been in a similar situation and can give me some advice on what action to take next?