There were other concerning items like a hardwired smoke alarm taken down, the new fridge handle that I had purchased ($60) was not on the fridge, and there was fallen paint and a large water stain on the kitchen ceiling (2 baths and wash/dryer above that area).

When a borrower is negotiating terms with a lender, he/she needs to determine the amount of points and note rate that will work best for their situation.

Pretty much my exact thoughts of the situation.  

I have seen the number increase dramatically before in other situations.

@Matthew Pease I understand what you are going through and am experiencing the same situation you are in.

The Village where the building is has now sought a demolition order for the building due to; smoke alarms, improper boiler venting, leaking gas lines to stoves, and leaking roofs over the front and rear entrances.

And then you have an Operations LLC - a shell LLC that is the public facing entity, doing all the interactions with tenants, contractors, leasing, hiring, management, etc. with no assets and very little funds beyond whats required for proper capitalization and operations.That's the basic idea, but things get complicated from there due to the partnership, financing, commingling, etc - which is your current situation.

I would encourage you to be as transparent with the seller as possible as your goal should be to help them out of a situation albeit tax delinquency, code violations, divorce, foreclosure etc... 

It means you're looking at exit strategy and risk mitigation both, which kind of go hand-in-hand anyway for this situation.

The trick in the city is to make your own situations.