Not that uncommon. Here's an interesting case in our jurisdiction where the owner won some damages against the municipality for egregious violations of building codes and its own procedures.

But your lawyer is the best person to advise you in your jurisdiction.

You don't say what year it was built, the records may be incorrect. Why was there ever any inspection if the builder never obtained a building permit? Why would the city have plans if they never got a building permit? It may be more records were lost, before hiring an attorney talk to the building department, calmly ask them why there is incomplete records. If you have certificate of occupancy, it appears there was some type of oversite. Without more information it is difficult to know your problem or remedy. Have you asked the prominent builder your questions?

You wrote that the house was 2 years old. Did you have an inspection done before closing? Did you buy it from the builder? Is it part of a subdivision that was built by the same builder? Are there problems with the other homes built by the builder?

It may or may not be the same in your area but in some areas the building permits are kept by the county government. Inspected by the various cities because each has particular things that are required in some but not required in others. You might ask your attorney to check there. If your attorney is unfamiliar with how it is handled in your area they might not know enough to help you. Some attorneys say more than they actually know about a situation.

I'm thinking there is more to this story. If a builder did not get permit, why would he then call for inspections? And why would the municipality do inspections without a permit in place? Totally apart from the quality issues and the fact that the records look like a mess, more digging is necessary before conclusions can be drawn.