The timing does suck because this issue came out of nowhere at the end of their lease.

Quote from @Leah Miller: @Justin LandesmanInsurance has been bound for weeks already so that shouldn't be an issue. 

Having the tenant be responsible for something like the first $1000 of each maintenance issue, or $500 can be a big help.

Do you think this issue is specific to banking services or what do you think is the root cause?

So far, no issue other than the biosecurity stuff.

of course the sale of hurricane damaged houses also confuses the issue (my house had no such damage but is only about 4 blocks from houses that did). 

It’s ideal to have them view the property after the inspection, so they can consider any issues discovered during the inspection in their bid.

Is there any state statute dealing with this issue?

Insurance is definitely an issue there, and will continue to be.

Here is the email received"An internal audit has been completed for STR permits and our records indicate that your STR permit was issued in error due to exceeding the maximum 12.5% blockface density.