Want to grt EMD back due to zoning issues

[Greg Soon]

Hi all, I won an online auction for a 3 building 7 units on a 5 acre lot that was under a single tax ID. I thought this is legal so I bid 9n it and paid deposit (10%). When looking for financing my lender told me the zoning is for single family and they called zoning board and was told the 3 buildings were non-conforming. Interestingly the government recorded the 3 buildings under a single address but counted the total square footage of all three properties. Zoning said it has to go through court hearing to decide if it can be grandfathered. The lender therefore refused to lend on this purchase. I never had a rejection by a lender before.

I talked to many other lenders and they all end up to be concerned on the same issue.

I asked the seller to get proof that the zoning is not an issue to meet the lender requirements, he refused. And if I do not close he will keep the deposit.

The zoning issue was never disclosed. The terms of the auction sale agreement is not contingent on financing. Do I have a chance to get deposit back?