Advice on Negotiating while under contract?

[Gert Dervishaj]

Hello BiggerPockets, 

My younger brother is under contract for a 4-Fam in Webster, Mass and he is buying through a conventional loan with 5% down since it is his first purchase. Before the inspection period, the seller/agent had told us they are going to complete the repairs on the 3rd and 4th unit. They were putting in new flooring, baseboard/door trim, new doors, and taking care of a live knob and tube wire in the basement. After the inspection, we noticed the 4th unit does not have a heating system and the seller agreed to install one. We have in writing on our P&S that the seller was going to "install a gas parlor heater" in the unit. I know those heaters are terrible but my brother had already planned to install a ductless/mini split system through Mass Save. The seller now wants to just credit us $3500 and not finish the flooring/trimwork and installing the heating system. I have also called the Building inspector in Webster and was told "as part of building code, that the chimney needs to be lined for gas heaters in old homes and that he would give anyone who is installing a gas parlor a hard time because those units are dangerous, especially to kids." The other problem is that no one in the area has wanted to install the parlor heater because of liabilities associated with it. They aren't even willing to provide paper quotes on the install. We have received soft quotes (verbal quotes) that the lining and heater install will cost at least $6500. The seller has not found anyone that could install the heater either. We are supposed to close on Friday and are all set on our side for financing, but the seller has not met the repairs side of the contract. Would we be able to negotiate for a full install of a better system like forced hot air or ductless/mini splits? What are the consequences for the seller if he can't/won't meet his end of the contract when we are ready?

Thanks for any advice!