The inspector was aware of neither the US Constitution, nor inspection law. He should have been fired.
"No Ex Poste Facto Laws." You're not allowed to make something illegal that was legal at the time it happened. In our case, that means that a structure can only be expected to meet code at the time of construction. Additions, remodels, etc. have to meet the code at the time that they're done, but this requirement can, in general, apply only to the new work.
The limits of the constitution do not, however, apply to the free marketplace. What the inspector was trying to do is something that is done by insurance companies: the law may not require you to upgrade, but the law doesn't require us to continue to insure you. If that means that your lack of insurance results in the bank pulling your mortgage, too bad.
