After they moved out the property needs obvious work: carpets weren't cleaned, there's holes in the walls due to fixtures and wear and tear.

Currently working through how much this is going to cost me (initial quote was for $5k) but Bridge has refused to provide any support, stating that due to the fact that a tenant had lived there for a year that it could be due to wear & tear and they would not be helping out.Without getting into nitty gritty about how long LVP should last for, needing to replace all LVP after a year, in my opinion points to improper installation not normal wear & tear.

It offers all the same benefits as STRs, but you don't need an STR permit, most HOAs allow them but don't allow STRs, there's less management since you have 4-5 guests/year instead of 3-4 guests/week, less wear & tear since your guests will almost always be couples or small families vs STRs where guests pack in the maximum occupancy...

They are hesitant, however, to have the bath addition permitted, because they fear that the city will make them tear out the entire bathroom to inspect the plumbing.

The town might make you tear it all out and start over.

Would the new owners be responsible for this if they have to tear down ceilings, etc.?

I just had to tear four of them down.

If I went to the county zoning or building department, maybe they’d say something I don’t like, like tear one down.

To spend that much I would need to gut the whole house, tear off the roof, and do everything brand new and modern.

You are probably facing an uphill battle to get it retroactively permitted at this point, and you do not want to use it as living space illegally, way too much liability.The deck may not be an issue, you generally don't need a permit for a deck that is less than 18" off the ground.....but if it is higher than that at any point, then you must tear it down to comply.