Property owners who refused to allow either the rental or point of sale inspection were subject to fines and possible criminal prosecution.The lawsuit, which was filed on behalf of several property owners by the 1851 Center for Constitutional Law, a non-profit entity, alleged that because the inspections were done under the threat of criminal prosecution, the ordinance violated the Fourth Amendment protection against unreasonable searches.

There may be other loans or IRS liens or unpaid property taxes or a pending lawsuit.

I once had a seller say he would let the EMD rot in escrow and file a lawsuit because he was mad that a buyer canceled during their inspection period.

A specific performance lawsuit to enforce the sale.Will cost you money to do though.

Most likely the state where the property is located is where lawsuits would be brought if they are something for personal injury like a trip and fall or something of that nature because the “cause of action” arose in that state.

And going a step further, how do you feel about paying the higher tax's when the city looses a $17million dollar liability lawsuit because 3 people died in a slum-lord property the city official didn't find, and the family of the tenants sue saying since the city official's job is to find slum-lord properties like there Sherlock Homes, and didn't, and people died, it's the cities liability.

Although it's technically a single family home, it has an attached mother-in-law suite with private entrance so the house functions like a duplex.

Buildings with structural litigation / lawsuits against the builder, particularly those without a definite dollar amount to fix, are extremely hard to finance. 

Sounds like you need to find a multi family property to live in and rent out, or something with a finished basement or in-law suite.

You can also look for a duplex or something with an in law suite.