HUD Foreclosure - How Bad is This?

[Account Closed]

My wife and I are attempting to purchase our first investment property, which turned out to be a HUD foreclosure. Our offer was accepted and we paid our earnest money with the intention of closing within 45 days, as required by our contract.

After about 10 days, our real estate agent received the following email from the title agency:

"Please be advised that this search has a major issue. The legal description on the deed where the foreclosed party took title is correct. The legal description on the mortgage, foreclosure and sheriff's deed and deed to HUD however are all incorrect. The subdivision has been completely omitted from all documents."

While the title company thinks that the matter can be resolved in 1-3 months, frankly I am not so sure. We really wanted to take possession as soon as possible because we are fearful that the house will significantly deteriorate if exposed to the elements in its current condition -- particularly during the winter months.

Has anyone had experience with such and issue? Can we get out of the contract with our earnest money should this linger?

It seems to me that if the legal description contained on the deed to HUD is incorrect, then perhaps HUD never had the legal authority to sell the property in the first place.

I would love to hear if anyone else has had a similar experience, how it was resolved, and how long it took.

Thanks!