I figured the agent did the BPO at some point and was very wrong and is covering now to the potential buyers that push back.The other option is as you say, the FDIC created some generic policy to mitigate a distressed banks losses, and the bank is now trying to comply.

Being this a cash transaction, this needs to be on the Closing Disclosure (former HUD-1), so your agent will comply all guidelines, and this amount can be applied towards the money you need to bring to the table, in Texas.

Nothing bad will come out, i have seen several times this happen, title will clean it showing proof, years ago a guy bought from HUD in LA a corner lot one fence everyone inbolved thought it was fine, he went to pull permits and found out he only whas owner of have the lot and on top he had to cut 5 feet from that side to comply with set backs he tried sueing but got nowhere with HUD.Strange that loan people did not notice (was it a HML).

.- Comply with all legal requirements, since your business if run from R-1 is still a subject to zoning, city codes, insurance, permits, licensing, liabilities, taxes etc.  

"Sorry, against company policy, please comply", is real quick and doesn't leave any room open for negotiation on non-negotiables. 

You may want to include something to the effect that you will not be responsible for any action taken by the county if tenant does not comply.

In PA, a pre-existing use will be grandfathered in which would mean you might not need to comply with the new ordinance if you can show you were operating legally prior to the issuance of the new ordinance.Ask your municipality (mayor, city manager, board, etc) what a tie means means? 

Make sure you use templates that comply with the laws in your State. 

Would either of these be more or less beneficial when the owner moves out in terms of setting a rent that complies with the ETPA?

Too many contractors out there have no idea of what they must do to comply beyond registration ...