Regulations agains seller financing for commercial properties?

[Josh Dillingham]

I am currently under contract on a 5 unit Apt. bldg. in Vermont. originally this was going to be a 20% down payment with 80% owner financing at 5.5%, three year balloon, amortized over 25 years. but the seller, who owns the property in an LLC, is being told by his attorney that he can't seller finance because of federal regulations. I don't have the specifics on the sellers situation but my attorney is saying it may be because he has already done a certain amount of seller financing and he would be required to get a lending license to do more. Can anyone tell me more about this? Is there any way to make this work? Would it change anything if we set up an interest free loan and I raised the offer price to compensate for the zero interest?