It's happened with electricians, constructions crews, cleaners, painters, etc.

@Nathan Barshinger when yo apply you have to tell them your status.

The challenge is vetting the potential tenant when they apply.

Barring that, you're going to have to go the eviction route, in which case a judge will ultimately determine how the deposit/last month's rent can be applied here.

Regarding the mortgage piece, remember that, when owning outright, you can take as little or as much as you wanting; however it's not a rotating line of credit so if you want to do it again, you'd have to apply again. 

However, this rule does not apply to 2-4 unit buildings.

By using someone outside the city, the seller has violated whatever ordinance applied.

I’ve applied for the permit with the MOA and because my place has more than 3 bedrooms, they are requiring me to put down a $5,000 deposit as surety for their taxes.  

The restrictions do not apply to a landlord with 3 or fewer rental units.

I use an IEN from the IRS to get tax breaks on purchases and to register or apply for strain programs and licenses.