This is a big legal issue that may weigh in favor of the investor.

I invest locally and invest out of state, and the main issue for most is the shiny diamond syndrome providing you the reasons why investing (insert area here) is the best place. 

I just learned that builders risk and liability insurance coverage can cease once a CO is issued for a new build.

Not sure what the issue is there. 

I'm saying that if you had the option of paying taxes on $50K or $21K, legally, all things being equal, which one would you pick? 

Seems like the township did not deemed the property a legal for unit property.

Myself I think if one wants to get into real estate in CA you get into the bizz you get licensed so you can legally collect fee's you put in the hard work like most wholesalers have to now..

First, there are small grammatical issues with their website that could indicate it might have been built by someone whose native language isn't English. 

There's a good chance the issue(s) you face has already been discussed and answered.Ask questions in the appropriate forum.

A clean U&O means the Seller doesn't have to do anything.The home inspector is a different issue.