How to deal w/Prohibited transaction w/Disqualified Persons?

[Ari Newman]

I am working to purchase a home from a seller in my area.  Upon my quick examination of the title in public records, it looks like the home was titled to the Custodian (Equity Trust) FBO the seller's 401k.  The house was purchased through seller financing, and the loan docs contain standard fannie owner-occupant language. (owner-occupying would be prohibited since it's a "personal benefit" to the account owner, correct?)  To make matters worse, the seller's daughter (disqualified person) has been using the home as her personal residence.  This is a friendly deal, and the seller's daughter has told me that the (equity in) house is her parent's retirement nest egg.  I'm not a CPA, attorney, etc. but I feel obligated to at least express concern to the seller's about the situation that they (& their custodian) put them in.  How would the seller begin to un-wind this mess?  How can I as the buyer/investor help? (Aside from buying the property)

thanks