If you have been accounting for this improperly that indeed will need to be cleaned up since it sounds like you may have not given proper credit to the Buyer/Borrower's payment to principal.Stop making this about a regulation that you do not really understand and make it more about what you are doing and how it was actually setup.  

And I stumbled upon a local community group specifically in that area that cleans, fundraises, etc.Property is newly, if slightly rehabbed (last month).

The sellers have kept the property immaculately clean and fully updated to today’s standards.

According to electric bills the heating and eclectic combined is an average of $500 in the winter months.

We use the following.Yard signsVehicle signsT-ShirtsHatsSoftball team sponsorshipBillboardsChurch & college bulletin boardsPensBusiness cardsCoffee mugsBumper stickersBumper stickers on water tanks & electric metersInternet marketingSocial media marketingGoogle ad words campaignBing campaign

All plumbing & electrical up to code.

No, their strategy was : buy, install a giant water turbine under the house, connect the whole thing to the grid and produce electricity to 150+ households nearby.

More fun facts: previous owner is skimming electricity!

The seller states that there are no electric or plumbing issues.My question is, could this be worth pursuing or a complete no-go in your professional opinion?

Yet another is to be direct, 'come clean' about your problem ('I need to buy X before this date, can you help me please?').