I am currently living in the space as a non paying renter.I got curious and googled the current owner and found out that the state of Oregon has a litigation case against him, his wife, his company and his business partner.This case was never disclosed to me prior to starting this home purchase.My questions to the community are....What rights do I have to now back out of the deal?

Maybe it's worth considering a civil suit when this is all over.

I would definitely let them know ahead of time , about your plans to subdivide and see if they are on-board.If yes then next step is to hire a Surveyor(to see easements/boundaries) then go to a local Civil engineer to come up with a site plan making sure there is access to all lots.

A landlord shall be liable to a tenant in a civil action for treble damages plus the tenant’s attorney fees and costs, and any other appropriate legal or equitable relief, if: (1) the landlord serves the tenant with notice alleging the landlord seeks to personally occupy the rental premises under subsection g. of 46A:15-1, after which the tenant vacates the rental premises and the landlord arbitrarily fails to personally occupy the rental premises or to effectuate a contract of sale for the rental premises within six months, but instead permits personal occupancy of the premises by another tenant or registration or conversion of the premises by the Department pursuant to The Planned Real Estate Development Full Disclosure Act, N.J.S. 45:22A-21 et seq.; or (2) the landlord who is a purchaser of the rental premises pursuant to a contract that requires the tenant to vacate in accordance with subsection g. of 46A:15-1, after which time the tenant vacates the rental premises, thereafter arbitrarily fails to personally occupy the rental premises within six months, but instead permits personal occupancy of the premises by another tenant or registration of conversion of the premises by the Department pursuant to The Planned Real Estate Development Full Disclosure Act, N.J.S. et seq.; or 

A little about me: I have a BS in Civil engineering and an MS in Environmental engineering.

To me, it is crucial to surround yourself with your competition and act civil and even friendly with each other.

If you have been a victim it is important to let that be known now so we can get this taken care of before your situation worsens as they abandonship.The city has commited to an active role in persuing criminal and civil penalties against them.

Thanks for ending it on a civil note.

It became the wealthiest city in the country for a while during and after the Civil War.

I cut my teeth in New York litigating these insurance companies and I can attest that these are usually rough cases - insurance companies have legal teams to push back on you, and even if they don't have a good case they drag it out for as long as they can to try run your bank dry.