In most cases, they learn of the transaction only when a Certificate of Occupancy (CO) application or a permit is submitted for repairs or inspections. 3.

.* In Some jurisdictions takes even 3 months to just get a demolish permit (even though permit expediter can be used)* Because of these 2 above reasons, I would have to come with high money upfront as I would need to buy the property in cash.

I would suggest to check with your local laws first.Most likely you will need permit ( I guess you can get away without, obviously not suggesting that :D)) but possible) , also check your zoning.If not possible to create separate unit legally, I suggest not putting an oven in the basement, and rent it without, or live in it yourself

The non-permitted unit is causing some troubles in getting this deal to move forward. 

Make sure it's permitted, warranted, approved by the HOA, and all that other jazz.I wonder how long it will be before the electrical grid collapses.

Did he pull permits?

Drop by your municipality's building, permit, and zoning office. 

John, not sure if you are familiar with the current STR situation in Huntsville, but the city has shut down STRs that are not zoned correctly and also not permitted. 

I'll give the county a call to see what they can share on the permit count.

Also, streamlining the permitting process could speed things up even more.