You found a code enforcement mess and you'll be hiring a contractor to tear off that unpermitted addition.

I believe the amount you can use, and whether or not it is enforceable is specific to your situation.

Easy fix, grout, maybe put some tile sealer down to help the grout, and enforce the wood underneath.

You can have the tightest lease in the world and if the tenant wants to move out mid-lease or park 3 cars instead of 2, or get 3 parrots, when the lease says no pets....I think tough to enforce.   

But local towns don't have enforcement units and rely on neighbor complaints.Other than that, the only other issue is parking.

Not only that, but with no rules to enforce, you might find yourself or your tenants living with others who don't care for their property, party hard and loud into the wee hours of the morning, stack up junk cars in their driveways like legos, etc.That said, if you still want to move forward, I would look for a portfolio loan from a local bank or credit union.

I don't see action on the legislative economic front.

I don't call them up and say " hey bud remember when you had that Kegger and I lacked the balls to enforce the rules and everyone in the building was pissed- yeah, well can you cut me some slack on fixing the leaking sink?"

It's not $500,000 of contents we're worried about, they can have $10k in contents for all I care, but 3rd party liability, they will have $500,000 or I will evict (yes I'm the unicorn landlord that actually enforces the renters insurance clause). 

Back to mediation... maybe you can have some input into how aggressive the mediators will be in coming to a decision at mediation.. and signing stipulated agreements that if violated are automatically become enforceable..