First review your landlord tenant laws for your state.I'd go over in depth the language, even if it's only on  notebook paper of thier rental lease / agreement... it has some terms that you should be able to really enforce,, if it's not stated on that paper that a sublease is permitted then "GOLDEN TICKET" .. you have cause (in my view) to file proper notice of lease violation and get them out.To have a attorney to review this is SMART money spent..

Do resolve this and get a permit while under contract.

Stat. 504B.161 permits just this type of system, but only if agreement supported by "adequate consideration" and "in a conspicuous writing." 

Week of 4/9/18We’ve started the permitting process with the local codes dept.

I've listed my high level outline below, and welcome any feedback.1 - obtain all building permits for the property - understand what's legal and what's not2 - talk to the city development person to see whether I can legalize the current illegal units and bring it to code, or if I'll have to remove it3 - after understanding what needs to be done with the property, talk to a home inspector to identify which units are in compliance and what's not (also get all the standard inspection items)4 - work with a general contractor to get a $ quote for necessary jobs on the property5 - bake those numbers into analysis to determine whether to buy6 - discuss property details with lender and get an appraiser's input7 - submit offer after passing all criteriasAs a first time home buyer, what else have I missed?

I understand there are plenty of owners who will turn a single-fam dwelling into 2 or more units without the proper permits or zoning since that is expensive and raises taxes.

Are there any laws that that permits landlord to view the results of the screening?

appreciate your post....I have a few questionsa) Builders fee excludes costs of permits, design and engineering, appraisal ....right??

I think that they are the scammers , I was literally gone for 2 days , the next door neighbor saw them but didn't saw anything they did tell me it was 4am tho , so I know they are the scammers, I have a permit for some electrical work so other than cutting the power I'm a loss , I think I'm just going to show up with the police at 7am and cut the power and go from there

One thing is to find a comparable property is tough because this is the first house that has came up since i have been actively in this market (2-3 Years) that has had a basement suite up to fire code and fully permitted to todays standards.