Complex Closing on Foreclosure

[Adam Summers]

I recently won an auction on a popular foreclosure auction website.  The house that I won sits on two lots.  The majority of the house is on the primary lot but the attached garage and part of the basement extend into the additional lot.  The original owner of the house and two lots is deceased.

During the closing process it was discovered that the bank only foreclosed on one of the two lots so the other lot is still in the name of the deceased owner.  The bank asked me if I would be willing to close on the one lot and try to work something out with the owner of the other lot.  I told them that I would close on the property with a price reduction and that the closing would have to be contingent on me being able to purchase the other lot from the owner.  

They have come back to me and said that they will accept the price reduction but can't make the sale contingent on me purchasing the other lot.  The bank said that they would accept a further price reduction in order for me to purchase the house with only one of the lots.  The other option that I have is to cancel the contract and the bank will refund my earnest money deposit and they will go through the foreclosure process again to include both of the lots.  

With the price reduction, this will be a very profitable deal but I am highly concerned about the possibility of the owner of the other lot not being willing to work with me on the purchase of the lot.  Has anyone ever encountered a situation like this?  Would you close on the one lot and try to work something out with the owner of the other lot or just cancel the contract?