Closing on home with setback violation???

TL/DR Discovered small (less than 5 inch) setback encroachment late in closing and need help deciding on how to proceed

Minimum setback per City/HOA is 5 feet per side, one side turned out to be 4.6 feet.

Built in 2017 & used as subdivision model. Seller waived a survey when they purchased the home from the builder. The home was then leased back to builder and used as the model for the subdivision. We’d be first to live in home.

Part of our contract included the seller to pay for a survey. Received survey night before last and title company noticed the issue.

I was told to consult a real estate attorney by my agent if I wasn’t comfortable, but also told that the lender is still on board with the loan (reassuring sign I guess?). I left a message with a law office and tried an online “find a lawyer” but haven’t got any feedback.

I asked the City Manager if I could get a letter absolving me of responsibility or citations in the future- was told they would not provide that, since the home IS in violation, so it’s my risk.

She also said she wasn’t going to “come cite me because my 10yr old home is .4 feet too close to property line”, but if I needed a permit in the future, I would have to stay in compliance with zoning laws. I do not plan to add onto the home, but I do expect to sell it after a few years.

Would like to know what kind of actual risk I would be taking on/liabilities I could have, since I don’t have anything in writing. I have to make a decision in the next 24 hrs.