It's not a big condo, But I am guess a sale for $220K even non-conforming would not be unrealistic.Rehab and furnishing would be $45K, with $10K for demo which I am certain will be less, but could also be more. 

What you describe is the same bad practice, if it doesn't conform to code.

Once it gets wet, it conforms to the ground and you'll never know its there.

Another covenant not with title: The property shall conform to all applicable zoning and building regulations imposed by proper jurisdictions at the time of settlement as a residential property.What happens if the seller backs out, any remedies?

Some folks get so roped up on controlling their tenants and making them conform to the rules that don't so much affect their tenancy, that they lose focus of the big goal here.

It's just talking down to me, treating me like I haven't even thought through the basic considerations before posting my question, and then not addressing my question at all.The first time I asked whether anyone had any experience with legal non-conforming zoning and FHA loans and was told rather abruptly I should just consult a lawyer if I wanted authoritative advice.

Hi everyone, I put an offer on a legal duplex in Hamilton (just got a zoning verification certificate from city of Hamilton, confirming that  the house is recognized as a 2 family dwelling, legally established non-conforming in zone C of Hamilton mountain area). 

I have a few off the top of my headNon-conforming zoned properties, way too hard to get around these (sometimes)High crime rates, D class neighborhoods - beware of bad neighbors tooLong list of building inspector code violations being transferred at closingToo many liens on the property (mechanics, tax, credit - you find these in the title search)Clouds on title (relatives in other states that have different plans for the property)Too much "spaghetti" on the table (hair on the deal, I am Italian and like food references)Happy to share my "Due Diligence Checklist" from our BiggerPockets Blog.

Yet the realtor conducted a regular sale of the property, and the buyer received a conforming mortgage. 

Not only will you not be able to count the rent....but if the 2 separate units do not have interior access to one another, you will need to create that access for it to conform loan requirements.