Contact a lawyer; have him read over the documents. Get yourself out of the situation legally, protecting yourself.
Hope that helps.
You don't want to be stuck between the sellers real estate agent and the seller when and if it goes court in 10 or 15 months, agents as well as sellers get short term memory loss real quick .. plus, you don't know what else has been played with.
The reality is you're pretty much out of luck. I'd run, not walk, away from this house and this seller and chalk up the $1,500 to eduactional expense. You already know he's lied and none of your professionals have given you much of a green light. Whatever you know about with this house and owner, there are probably 50 other things you don't know and won't know about until after you close and then you're stuck with it. Realistically, you can forget about getting your expenses back, it's not going to happen and it's not worth trying to sue over.
I'd just move on. There are so many houses on the market without these problems. Why sign on for sure trouble?
This perception of additional value persists in the mind, even if the final objective achieved is no better ( or worse ) a result than the achievement of a goal by simpler means that is more easily obtainable. .
Examples: What is a better home run? One that goes over the fence or an inside the park home run?
What is a better touchdown ? A photo op play with 3 hand offs, 6 lateral passes and a hard tackle at the end zone... or a straight open field run ?
Some of us thrive on complication and intrigue. Sounds like Wayne's seller prefers doing things the hard way.