Is the owner short selling the property you're living in? If so, how do you know that if you're not talking to him?
Whatever the situation is, when you have no lease, you're on a month-to-month lease, and you still have tenant's rights - and the responsibility to pay rent. If the property condition isn't good, you have the responsibility to tell the owner what needs fixing, or you can give proper notice and find another home - no person or lease is making you stay.
If the owner is selling, he can transfer your security deposit to the new owner, give you proper notice to vacate, or the new owner can have you sign a lease, keep you on month-to-month, give you notice to vacate so they can live there, or even raise your rent if they think it's too low. The fact that the home doesn't have permits doesn't have anything to do with you as a tenant, unless the home is uninhabitable or unsafe. If that's the case, see above and see a real estate attorney to see what your options are.
In any case, you might want to start looking for another home in case you need, or want, to move.
Good luck to you!