Lien clear in 3 weeks, nothing new in some instances foreclosure buyer may not take possession for days after closing all depends .
Bank may not terminate however could be delays in closing.
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There are many factors in play here.
Does your client want the utilities to be turned on so they can do an inspection, or are you trying to use that as an excuse to get out of the contract? The standard TREC 1-4 contract has a provision that sellers must turn on utilities, however some bank addendums say utilities will not be turned on, or there can be a fee for de-winterization and rewinterization.
If they have not turned on the utilities and there is no other provision for them, then the seller could potentially be in default. You or your buyer would want to address this with them with the advice of your broker. In my experience, most REO owners do not want to sell a property to someone who doesn't want it. If you make clear your objections, in my experience they will allow you to terminate and return your earnest money.
It's tough to tell from your question though if you want to move forward or terminate.
All liens are cleaned up prior to closing. There is a possiblity that the prior owner does indeed redeem the property. There is nothing you can do to speed up the process. The banks move at their own pace. If the inspection could not happen and utilities can be turned on, I'm sure the listing agent will work with you on extending the inspection time if that was agreed to in the contract.