This is one of those situations where you know something is wrong, but you feel you've gone too far to turn back. Sometimes you have to go the distance and sometimes you need to let it go. If its not right that's what you need to do.
You haven't mentioned a deposit in your question, but if you made one you have a valid reason to demand it back since the title is not free and clear. Remember this is a business deal and put your emotions aside including any feelings you have that this is the "perfect home" for you. You may come back to this deal later with better terms if you show you are willing to walk away.