NEED ADVICE ON DUPLEX ZONING PLEASE!!!

[William Donnelly]

Greetings BiggerPockets,

I'm currently under contract to purchase a "duplex". This property was a bank owned foreclosure, listed at $230,000, and our offer was accepted for $140,000. I'll spare the rest of the details for a later discussion. We have been under contract for 30 days now. Literally everything was completed and ready to close except the VA appraisal. The initial appraisal was promising, with only a few minor repairs needed.

Upon further inspection, the VA appraiser discovered that this property is in fact NOT a duplex. The properties are zoned individually as two separate condo's, and have been zoned this way since the construction in 2005. The selling bank and listing agents obviously had no idea. After my realtor contacted the states zoning department, they said there's absolutely no way to change the current zoning on this property.

The only suggestion anyone on my team could come up with, is use a VA loan for one side, and an FHA loan for the other, each priced at $70,000. My current lender will not be willing to do two separate loans. Plus, I think the risks outweigh the benefits as far as the general obstacles to overcome for that whole process.

Unless I can come up with a creative way to purchase two separate properties, this deal is dead in the water. Any Ideas?