Dispute with realtor

[Changseok Kim]

Hello BP members, 

I purchased a 3 bedroom house for rental with cash and just finished the rehab. However, it turns out during the rental inspection that this house can be only listed as 2 bedrooms because one small room does not meet the requirement of habitable space. It was listed as 3 bedroom house in MLS when I purchased it. I complained about this to my realtor and the seller's agent, but they say that the house has been historically listed as 3 bedroom house and showed me the previous MLS listings of this house. (Interestingly, the MLS listing indicates that there are 1 bedroom upstairs and 2 bedroom on main floor, however, this house actually has 2 bedroom upstairs and 1 bedroom on main floor. )

Because of the inspection result, I cannot rent it out or sell it as 3 bedroom house anymore. There is no space to add more room in this house, and even if there is, it will cost a lot to add one more room in this house. 

Is there anything that I can do in this situation?

Thank you, 

Chang