Sounds like you've had your home inspection, and will get the normal warranty deed with title..

Are total closing cost amount normal for my type of loan?

Usually collecting a fee is how if is normally approached.

If you close in 45 days with a normal owner-occupied loans, you should be able to make competitive bids. 

Let him go month to month, you can do the normal rent increase. 

Is it a normal practice?

Has it become normal in this market for the buyer to pay the difference in the appraisal and the offer(3k-10k) in which in some cases basically pays the sellers closing cost?

They normally require 20% down Payment.

Is this a normal amount below asking for a duplex in this area or can you get a larger discount?

If you have no recourse, it would be better to sell than to let this HOA interfere with your business forever.These growing HOA abuses are an illustration of how little help normal people get from state and local governments.