Does a rental need to be up to code?

[Colter Orr]

My husband and I are looking at purchasing our first rental property.  The property is listed as a single family home with a separate entrance to a mother-in-law apartment in the basement.  The seller is planning on putting a egress window in the basement as part of our buy-sell agreement.  However on going over the revised by-sell agreement today the seller disclosed that the egress window is being placed without a city permit to avoid cost of such permit and to avoid having a city inspector come to the residence and check to see if the residence is up to code?  Any thoughts on this?  Does a rental property need to be up to code?