I've been known to make the journey up to Round Rock or Cedar Park on occasion.

My most recent is a 276 unit apartment complex, came from a broker relationship.The next one behind that was a SFR from online auction.The three previous are all SFR from auctions on the courthouse steps.Those three channels are where most of my deal flow comes from with wholesalers and MLS rounding out a minority.  

Since they've left I've visited the property and done a few rounds of back and forth to figure out a renovation layout that would be physically possible, and to get bids from my contractors.

You might want to get an appraisal from a licensed appraiser familiar with the area.Or does the subject property have things wrong with it that are high ticket items.

Maybe they get away with it once, maybe 2 or 3 times if they get lucky but eventually they will get caught.

Is that fair that an hoa believes they can just get away with crime and when they are going to be punished for their wrong doings, they cry like a child saying that's not fair, we don't deserve this?

Same with a CPA team that provides us unlimited advice year round and does our business taxes. 

If the city requires conversion, you can deal with that problem later - don't let this deal get away from you!

I'm sure you could get away with doing it yourself, though. 

Cut your loses and don't pay that demo charge, that's called front loading, they pack heavy price line items/big profits on the start (demo, earthworks, rough plumbing, rough electrical) then there's no profit on finishes like cabinets, painting, flooring, etc. legally they could get away with it since both of you signed the agreement.