Property is not in the same condition as when offer was submitted

[Nick Latanision]

Working on my first deal.. Not going so smooth. I recently made a cash offer on a bank owned property, 5 k deposit, they accepted my deal. The property had a small roof leak on the back 2nd story roof. Along with my sales agreement, it stated, the property needed a tarp on the back roof, and a dehumidifier to remove the residual moisture, within 48 hours. They followed suit and had a company tarp and dry the room, all is well, until I drove by the property after a rain storm and noticed they had wrapped the over the edge of the roof, around the gutter and nailed under the soffit. the tarp was attached in such a way that it collected water against the house and allowed the water to come back into the property via the exposed soffit.

My agent tried to contact the sellers agent to fix/ resolve this issue but we have gotten no where, I told the bank that the property would need to be dried to proceed with the sale. After getting their legal team involved. They will not dry the property and would not release my deposit after the formal paperwork was submitted to them. They stated that the property is in the same condition and to proceed to closing as scheduled.

Besides arbitration how do I deal with this issue. Any tips?