However they are telling me because there was a dry cleaner business at the mixed use building in the past there could be soil contamination. 

Every area has their issues with soil, floods, earthquakes, etc., and the government (the taxpayers) can't insure every parcel of dirt in America is buildable forever.

The plans would have to be submitted and approved locally, have engineers, soil tests, water tests and much more...unless you are building with a larger builder. 

In our state senior tax deferral you usually don't learn about that until you get a property that had one.. only way to check to see if there is deferral is with a phone call to the county tax collector... ( that happened to me to the tune of 90K)  its a one time lesson although I will say I salvaged what I thought was going to be a 150k profit deal and it was only 60kk could not figure out why no one bid on it  LOL4. get caught up in the bidding process and pay way to much only to find that out when you sell it and make no money5. not bidding on a great deal because of an IRS LIEN  they rarely redeem I got some of my best deals that had those on them.most other phycial problems like soil foundation etc one should be able to see6. rural property... septic or well is bad and can't be fixed house can't be soldThe greatest barrier though is in CA and many other hot markets your up againts companies that have 8 figures or better and your competing againts them.Or you have some one who wants to buy the home to live in it.. rarely will you beat them.So there is a ton of leg work with little reward if you don't have a wide open net to what you want to buy

If it were mine and if I were going to keep it,If it has drinkable water (well) and perk down soil I would build a small desert get away house for myself, with roll down shutters.Then when that was done, further in off the road I would begin construction a real nice desert get away house for myself with a pool and a hot tub (and roll down shutters.Then use both houses personally as a wanted.

@Sandy MoralesI am a broker who does both residential and commercial lending. 

They don't understand that a house that is 9 inches higher on one side is a very common thing here, and they are demanding a soil report, a safety report from a structural engineer, and some type of chemical something-or-another report.

Does covering with new soil & re-seeding the area work or would they be in issue if the ground changes over time (due to rain)?

Family members have not seen him in years so even if he tells me to pound sand I can tell his family he is alive at least and he will know he is going to lose his house to tax auction and he can rectify his problem himself.

There are two job sites about 2 miles away with compaction dirt, plus the soil is dry.