Illegal Half Bathroom w/ Traditional Lender

[Ryan Breen]

Good evening BP nation! My wife and I are looking for our first house and came across one we really like.  Only problem is that there's an illegal half bathroom on the main floor.  The current owners have no desire to get the proper Certificate of Occupancy for the half bath and we're using a traditional lender (big bank) so we think this will be an issue to get a mortgage.

1.  Is this common?  How does a seller plan to sell a house without the proper C of O on a house?

2.  Is there a was around this?  The bathroom is small, so is it possible to remove the toilet and sink until the proper certificates are obtained?  Or will the lender not even approve the mortgage with the illegal bath?

Thanks in advance.