This is definitely a question for your real estate attorney. There are usually provisions in the bank addendum that will describe what type of title the bank is required to convey and what happens if they cannot convey clear title. Most addenda I have seen limit the banks' liability to the return of the earnest money; no money back for inspection and appraisal.
This is a good example of why an attorney who exclusively represents the buyer should independently verify good title and confirm availability of title insurance availability before a buyer spends money on anything else. If you appreciate an answer, please give "thumbs up". For the most helpful answer, please say thanks with a "best answer" click.
Definitely have your agent reach out to the listing agent and ask that they advocate for you in seeking reimbursement of your expenses. It never hurts to ask. You may end up with nothing, but at least y ou can say you tried. Best of luck!
Kathleen Turner, ABR, CRS, ePro
The Kathleen Turner Realty Group
Did the back offer any option or say anything about how long it would take to resolve the issue and could you wait it out if it was a reasonable time frame? i have been in situations similiar to yours (not knowing ezxactly the whole story) where the bank filed a wrong paper or forgot to file something and had to delay the closing and cancel the transaction only to have it resolved in a week to two weeks so we could close...
You may want to have your Realtor check witht he bank Realtor and see what the story is behind this and whther you can still get the house.
If you Opt'ed in, then you will be forced to use it.
If you Opt'ed out, then you can use a Lawyer or Small claims court.
You should be able to get your Deposit bacvk from the Title company, since you are a principal.
All this is irrespective of the question of the "proper procedure while foreclosing":
What does this have to do with you, as long as you will have clear title?
Good luck and may God bless