BIG potential title issue. HELP!!!

[Joshua Feit]

Hello BP!

I have a duplex under contract in Atlanta. We pulled the title, and there is 24K of outstanding water balances. It's not a lien, but they are bills owed by two different past tenants.

In Atlanta, these bills follow the property (not the tenant and not the owner). The balances of such bills will even survive a foreclosure process. Crazy, but true. (I verified with the city just today.)

The contract states:

Buyer shall have the title of the property researched prior to closing. Any expense of curing title, including but not limited to legal fees, discharge of liens, and recording fees will be paid by the seller. This agreement shall be extended as required to resolve any title issues revealed by said title search.

The seller's lawyer said verbally that these unpaid bills will "appear as information on the title, but they are not liens, and we will be issued a clean, marketable title at closing".

I have already agreed to close with the seller's attorney, so basically I am unrepresented at this point.

Needless to say, this all makes me feel NERVOUS!

QUESTIONS:

1) If I purchase owner's title insurance, would this cover me in case these bills are not actually cleared up?

2) If the seller is unwilling to pay these loans off in time for the closing, should I back out? 

3) If so, does it seem from the clause above that he is in breach of contract, and that I should get my earnest money (2K) back?

Thank you for helping this new investor out!

Cheers,
Josh