If that doesn’t work, you may need to seek legal advice or reach out on social media for more visibility.

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

- FYI: it's only illegal to try to rent it out, the property owner can usually legally live in a nonconforming basement unit.If you do all this you may still negatively cashflow each month, so make sure your income can cover and/or your cash reserves.If you do this successfully, you will learn more in 1-2 years than you would reading here on BP for 5+ years:)Good luck:)

The tenants in the 3 bedroom rental aren't in a protected class but I do not want to get in any kind of legal bind. 

If a claim is filed and the property is owned through an LLC the individual members are less likely to be named in the complaint and that above all else keeps the members name out of the docket.

Also check the agent's license record in their State for any complaints.

If you buy it too low, in some jurisdictions they will call it "equity skimming" which is illegal.It can be very profitable, I've done many, but you really need to know what you are doing. on pre foreclosures on the West coast if you happen to do them legally .. the old owner is due 80% of the profit if you sell within 36 months.. so there is that.. but if your buying pre foreclosure for long term hold and wait out the 36 months then your fine. the reality these days is post GFC lenders/ banks/ servicers have realize that working with the buyer to reinstate recast redo the loans is far better than taking it all the way to foreclosure so your correct its usually the worse houses that make it all the way to the end and go to sale.thats why if you follow NODs  Notice of defaults or whatever they are call in your state. you see so many postponements and or removed or paid off etc.. so you hone in on one property do all this work only to have it not go  to sale  rarely are you going to buy a home that you really want LOL

Legal entities are set up for this purpose.  

Has anyone had any luck obtaining legal counsel and fighting this?  

Who would not want a legal, permitted unit for $8k or anywhere close to that (i believe the $8k is likely optimistic)?