Need help! Lot we purchased was subdivided!

[Carrie Angyal]

We are under contract with our first 3 family rental. The sellers realtor is the brother of the owner of the property who has just passed away. The 3 family has a nice corner lot with a large garage. When we went to sign the contract the sellers realtor said that the land might be able to be subdivided and built on. My husband called the town today to find out that the land had already been subdivided and sold over 20 years ago by the seller to pay back taxes. So basically, we are getting half the land we were shown and are under contract. What should we do? Shouldn't this have been disclosed to us upfront? Also, the seller had two offers come in right behind us so I really don't want to lose the property, but this is a huge issue. Thank you.