I'd sue them in order to execute the contract. They signed a purchase contract that they would deliver free and clear title. As far as I know there are no backout clauses for an "oops, I guess we have a few liens and can't close". That's their fault and they are negligent for not having knowledge of the condition of the property.
While you're at it make sure you sue them for your attorney fees too.
They're the ones that are trying to breach the contract.
