New Property Purchase - Inherited Problems

[Rob Borkowski]

Just closed my first deal last Friday. It's a single-family home that was a Fannie Mae property in near move in condition. The property was listed initially at 109,000 and over the course of (3) months it dropped to 90,000. I was able to purchase it for 85,500. 

I closed and then applied for the driveway permit on the property. While the zoning officer was at this property he noticed a vent coming out of the basement foundation that didn't appear to be correct. Upon further inspection, the zoning officer condemned the property due to the incorrect venting on the newly installed furnace(which was funded by fannie mae ) (3) months prior. 

So after some research with the furnace company, the zoning officer/building inspector, and another hvac installer the *new heating system has to be ripped out of the house as it was installed totally incorrect and is unsafe. And here I sit with a property that's a week old and now covered in bright yellow signs. 

Additionally, that entire unit can not be used in that house unless a chimney is built(due to the kind of furnace it is). The installer is in PA and violated local code, the national gas code, and manufactures requirements with this install and did so in a completely unsafe manner.

So now I have two options. install a new heating system or build a chimney. both range from 3500-5k,  but the initial reason for this post is does anyone think I have a leg to stand on with fannie mae and try to have them rectify this?  or should I just cut my losses? The property was advertised with a new heating system. 

Prior to my purchase the property was inspected. The inspection company related they are not HVAC techs and addressed the furnace as in working order and are not up to date on code.