If you want the house, then yes. It is standard language in nearly any PA I've seen. Banks want to have the right to pull the offer if they need to, though I haven't heard of an occassion that they have unless there's title issues they cannot resolve (in which case any deal would fail).
Of course you should speak with your agent and an attorney if you need legal advise but it is things like this that are the reason you are getting the home for a very good price (I assume).
Nearly all of my clients that have bought a foreclosure have felt mildly violated during the process but after closing and a few months pass they are happy they bought the home.