Question, is covering drain in the basement with a carpet violation of Wa state building code?

Be careful when taking advice from those who live in other states...they are not familiar with Texas contract law or the Texas Property Code. 

What was the code for the rejection ?

You can also draw your own plans, but it can be a painful process for someone not familiar with all the code and design complexities that building departments like to have spelled out on a set of plans.

We are talking about bringing items up to current code, when it was just fine for the last owner.

Some utility companies have there own inspectors who come out after the city has inspected (and typically request some changes), and have their own rules and codes in addition the local building codes. 

Therefore no matter the address changes or alterations the lien still holds based on the legal description? 

The Landlord/Agent may enter the dwelling unit after giving due notice (24 hours) to the Tenant and the Tenant has not unreasonably objected, to: make necessary repairs, decorations, alterations or improvements; supply services only by mutual agreement during normal business hours, except in an emergency; or exhibit the dwelling unit to prospective purchasers, mortgages, or tenants only during normal business hours, including weekends, except as the Landlord/Agent and Tenant otherwise agree.

Also,after learning from BP Podcast and Forum, I called my County to see if I can acquire a Code Violation list and the lady emailed me a list of the Code Violation in 3 of my surrounding cities. 

Portfolio lending is often by zip code, so it'll be whoever the folks at your local REIA say is awesome.