Junk cars, cars in blocks, non-functioning or unregistered vehicles are not permitted on or about the property, landlord may remove above said vehicles at personal property owners expense."

@Jay Hinrichs is right on as usual.Its not $400,000.Its $400,000 minus cost over runs, additional permits, and approvals, as well the IRS. 

People being told they may not be able to get permits to rebuild there homes until the get there homes "raised" to meet elevation standards being that most these homes were built before these standards existed and this can cost up to 100K for alot of these homes being that they are all slab foundations.

@Marc Oister:This may be a question due to Colorado's strict building codes, but was the addition permitted?

On the same second floor there's also locked entrance door into an attic apartment.So in essence, the 2nd and 3rd floor spaces are separated from the 1st floor by a locked entrance door.The 3rd floor attic apartment is currently not legal since I don't think the prior owner pulled permits for it (ie, shares utlities with 2nd floor, no oven range, etc.), and the area is simply not zoned for more than 2 family housing.  

there is over 40 Million worth of new building permits that have been taken down in last 6 month.

You get clean title at sale, but if you need to pull a permit for anything, it won't be granted until the violation is paid off. 

If you're in City of Decatur, I believe they apply the 50% rule... more than 50% and they permit you as new construction.Hence - tear it down.

I've seen lenders require people take out loans and take title themselves then later Weeks or so - after the original deed is recorded) permit the property title to transfer to an LLC. 

If the property has an occupancy permit, and is legally able to be zoned for a primary residence, it can be financed.