depends on who you ask.Going back to the point and restating a previous comment - YOU NEED TO CALL THE LOCAL CODE ENFORCEMENT/BUILDING OFFICE!!!

I get the bathroom it should have an exhaust fan.OK im in Calififormia while older buildings pror to 1985 may not building codes now requre cooktop ventilation. https://up.codes/viewer/califo... 

Or is it a code violation?

A quick look at comps shows that tenant-occupied properties are selling at 65-110k while some sold to owner occupants are selling at up to 200k in this zip code. 

More for the folks that live hereI did a deep dive yesterday and prices are stagnant to up slightly in basically every Pensacola and Santa Rosa County zip code so you are 100% correct that we aren't seeing a collapse currently. 

Interest Due on RedemptionInterest is due on the amount of the successful bid at the Tax Sale based on the month during the redemption period the property is redeemed according to the following schedule:Month of Redemption Period Property RedeemedInterest First three months3%Months four, five or six6%Months seven, eight or nine9%Months ten, eleven or twelve12%However, in every redemption, the amount of interest due must not exceed the amount of the bid submitted on behalf of the Forfeited Land Commission pursuant to Code Section 12-51-55.

I know it needs a few things (bathroom size) revised to make it code compliant, and I will need an architect to help navigate zoning (another thing we don't do in Houston :D), site plans, elevation aesthetics and local requirements. 

I use Owner Rez and the Schlage Encode integrates so that the lock automatically assigns a code to each reservation and includes it in the check in instructions.

If you wish for each home/lot to have their own septic tank, counties or city code will usually require a minimum lot size (1/2ac - 1 ac min roughly). 

Maybe they never spent the money or it's not up to code to have a person living in the space.