Sales price won't cover seller's debt obligations

[Andy Madden]

Hi all, I'm a real estate investor in Pittsburgh, PA with 7 units under ownership. I'm currently under contract on another duplex, and have been since mid-November. The closing on this contract has been extended several times because of issues the title company has had receiving payoff information from multiple leinholders on the property. The new closing is currently scheduled for tomorrow, but we just found out about a huge issue today that could make the deal fall through. The seller is a community organization in the area, with dozens of properties under ownership. They received funding from the Urban Redevelopment Authority (URA) to purchase many of these properties and rent them out at affordable rates to community residents. My agent and I were not told from the get-go that the URA had to approve the sale of the property; we found out 1 week ago. We found out yesterday that the URA is not approving the sale of the property because they are the second leinholder and would not receive enough money back at closing. Instead, they set a minimum price that is approximately 20k over the appraised value of the property before agreeing to a sale. My question is what kind of recourse do I have in this scenario? We've been under contract for 2 months and are just finding out about the URA's involvement. Are they allowed to forbid a sale and demand a price higher than the appraised value? I assume since they would still have a lein on the property since they wouldn't be paid off they can? Unfortunately this is the seller's agent's first transaction and this is coming out now. But I have appraisal costs and the title company had done a lot of work on this already, so there are costs there too. Who would be responsible for those if this doesn't go through? Thanks in advance for any help/insight you all can provide.