In my city, if it's more than 50% below grade it's not inhabitable as primary living space, period.

Look at it like this: suppose someone said they want to live in a neighborhood with (x) ethnicity as the predominant inhabitants.

I'd need to get these repaired when I moved out for the next tenants to inhabit the unit.  

You bet, assuming it was in habitable condition.

Also, I believe he may be liable to pay for alternate housing if yours is deemed un-inhabitable (as it seems to be from your post).

I'm in the process of purchasing my next foreclosure and the bank called to inform me that they have to stop working on my loan because the appraisal came back stating the property did not meet C4 conditions and mentioned the place was in habitable due to poor floor covering(stained rugs loose tiles), holes in walls, urine smells and broken window panes.

hi mark, i was thinking of just flipping it. its a small 2 bedroom which would not bring in much for a rental i think, and rental is not really my game. it is in an area that i know is currently in a revitalization effort by the city. the director of development has told me that they are putting in a mini mall with a major grochery chain store involved. also, they have already started to put in 48 new houses in the immediate area as part of that revitalization effort too. admittedly, this house is in an area that has deteriorated over the last 20 years, it does have a multi unit " projects" housing very close by and has gone from largely black area to more arab residents. the street that this house sits on has about 10 new habitat for humanity houses already built and inhabited also. its an area that is up and coming, but is only in process. if i get it, i will let you know, mark

You could buy the property and have a sewer line collapse and need 5k before the place is inhabitable.

Treat it as an investment and ensure that it is in habitable and comfortable for your tenants.

I'm leaning toward share-cropping hops (as the landowner side) and working with recently discharge military vets who are transitioning back into civilian life within a structured healing program.