Furnace not up to code

[N/A N/A]

Hi,

Wondering if anyone has any thoughts on this situation.

We bought a house about 2 years ago.

Facts:
1. The furnace is not up to code due to clearance violations (and wasn't when we bought the house)
2. Our inspector pointed this out.
3. When we questioned the seller about it, they insisted it was up to code, and produced the signed permits from the city inspector.
4. Our agent didnt seem to think it was a big deal.
5. We bought the house.

Here are some assumptions (based on input from a Furnace repair man who we hied to fix a small problem, and who claims to have installed (or moved) the furnace originally):

1. Construction work was done by the seller on the room where the furnace is located after the inspector signed off on the furnace.
2. The inspector never came back out to look at the furnace after this construction work was done.
3. This work created a situation where the furnace was no longer up to code.

For the sake of argument lets pretend the assumptions are correct. Now the main questions we need answered are:

If the seller didn't know that the subsequent construction work they did created a situation where the furnace was no longer up to code, are they liable for costs to bring it up to code? Is the broker at fault at all?