VA Owned REO contract and foreclosure issues

[Malik R.]

We made an offer with $2K earnest money using the regular real estate offer forms on a REO property in California that is owned by VA. The offer was accepted but we were told VA does not accept the regular forms and has its own contract document that we have to sign to have our offer accepted and we did. We were also told by our agent that VA is exempt from most disclosures. A closing date was set for mid-December at the title company where we tendered cashier's checks in the full amount (minus the earnest money) and signed all the closing documents. We were told by the escrow company that the sale will be registered with our county in 2 days. Two days later we were informed by our agent that closing needs to be delayed another 4 days because the foreclosure attorney had found some issues with the title and they need this time to resolve them. We were asked to sign an addendum of accepting this delayed closing date of 12/26. Well, the six days went by and then our agent tells us he received a call from the seller's agent that it will take them more time.

The VA contract we had signed has no clause for the buyer to cancel the purchase if the seller cannot provide a clear title by the agreed upon closing date. It only gives the Seller the option to rescind as such:

Seller’s Right to Rescind: Seller at its sole discretion may rescind the Contract of Sale of the Property and return the Purchaser’s Earnest Money under any of the following conditions: Property is damaged prior to the Closing Date, Seller is unable to deliver the Property as advertised, Seller is unable or unwilling to remove valid objections to title prior to the Closing Date, any errors are made in the calculations concerning the offer to sell the Property, Seller is unable to acquire title to the Property, or the Property is subject to any redemption rights. So now we have all our funds in escrow with no concrete closing date and no opportunity to get out of this mess. They should have stopped the closing process of signing documents and accepting funds in escrow if a clear title was not available on the original closing date. Since Seller was unable to remove valid objections to title prior to even the extended Closing Date, they should rescind and make a full refund. Currently, there is no valid extension to Close of Escrow addendum in place. We don't want to risk losing any of our funds deposited with them and would rather get out.  Is this normal with VA sales? Do we not have any rights during this undefined limbo period?