The answer is "Yes", as they are not able to get clear marketable title. I have been in this situation numerous times, and if you can hang in there until they get marketable title (may take 3-6 months...or more), it may be well worth it. If you can be in contact with the attorney/paralegal that is representing the bank, you may be able to get a lot more information. There will be more than adequate language in the purchase agreement that protects them from performing, so your best bet is to concentrate your efforts on figuring out the time-line and the specifics to close.
I hope this helps and best of luck!