The seller has the two lots legally separated, but due to deed restriction imposed by the subdivision development, found that building a house on the “tennis court” lot was not allowable. 

Your lender has a legal right to know.

Quote from @Sarah Ali: The seller has a contract with the agent, which means they can't legally sell the property without compensating the agent.

We buy at a discount and pledge our legal right to collect the debt (a collateral assignment agreement) as the collateral for the private capital loan we take out, which is backed by the value of the real estate securing the 1st loan.  

This is something their screening probably would have caught, or their system would have a legal procedure to deal with it.

If you need financial help, ask under the "Finance, Tax, and Legal" forum.

@Cade Antonucci it frustrating but I am yet to find a legal on line way of doing this. 

As European residents, we directly manage investments, leveraging the fiscal and legal advantages available in the EU.

I am obviously conflicted with the moral side of pursuing legal action here, but understand that people can do untruthful things when it comes to financial gains. 

Interesting, since when did it become HRs problem (or legal right) to determine that "he is supposed to have found housing already".