1st and foremost you need to contact a real estate attorney...ASAP.
Yours and the seller's attorneys knowing the detail of the case, will make the decision.
The property itself may not be lost to you, but before you apply for financing elsewhere, you will need to be under contract with a fully executable purchase and sale agreement. It may mean renegotiating with this seller and drawing up new documents. They are under no obligation to honor the terms upon which you previously agreed. Make sure you are fully aware of all deadlines. When in doubt, clarify. If you don't, as you have found out, the results can be a very expensive legal lesson and a big disappointment.