Communication with the borrower must be compliant.

If you are compliant and give them a "quick one" to go through they tend to be happy about it. 

Many of the products sold at Home Depot are not code compliant.  

Section 8 tenants are usually very compliant when asked to move because they can just get a new voucher.

One you want to work with should be ensuring you are compliant, but otherwise getting out of your way and letting you do what you want.3.

But is there anything that I would need to do to set up myself to be compliant with the city code/state regulations? 

2) What makes the basement non-compliant?

-also the tenants have been very compliant so far and really want to stay, so they seem pretty reasonable

From my understanding to be compliant you either need to fully close on the property yourself and then sell it or assign the contract without the customer knowing the address or seeing any pictures.

Make sure you are compliant with these elements as you move forward with any wholesaling in Illinois, and I'll also echo the importance of working with a local real estate attorney who knows the ropes - at least for your first few deals.