IMO, it is legal because you're getting a house under contract and as far as everyone on the outside is concerned, you are intending to buy it.

I this situation I was thinking about various financing methods, the first that came to mind was to take the seller's offer with an outside entity covering the down payment and closing (Hard money, private money etc.).Another option may be to ask if he's willing to do seller financing, though I don't know if he has a mortgage on the property that would be due on closing. 

What can I do, if anything, outside of contesting the assessed value?  

I'd just go basic on the heating/air unit and have someone pick you up a decent commercial unit (something that would be installed at apts like Concord brand) at Washer Specialites near downtown or one of the supply houses in town or someone who can even sell you a used compressor for outside, and all new stuff inside etc. 

There's a lot of potential in this deal if I buy it right, because in addition to negotiating down the penalty for the code violations it is also way over assessed, and I can appeal to the tax board to dramatically reduce the taxes because it is outside of the statutory 15% wiggle room they're allowed on the assessment value. 

But I'd rather live a radical life outside of my comfort zone than die in my lazy boy.

I know I need to seek expert advise from CPA/Attorney but in the mean time, has anyone from CA had this same experience or know the ins and outs of LLC formation outside of CA if you live in CA?

I also work closely with other brokers outside of Manhattan who I'd be happy to put you and your brother in touch with. 

It's like the listing agents don't think outside realtors can handle the complexities or they want the double fee.  

These areas are 25-30 minutes outside of Center City but have easy access to public transportation and there is a demand for commercial units in these areas.