You have not asked a question, despite your question mark. You need to consult an attorney to determine what legal or equitable rights you may have in the property. Good luck.
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Wasn't sure what exactly you are asking. I agree with attorney Daymude you need to hire an attorney. You mention they are represented which puts you in a disadvantage. So level the playing field and seek consultation so at least you know what you would be up against. Good luck.
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First, the question of whether or not you should fight to buy the property. I see no value in doing so. If the property is over-encumbered, then you're paying too much for the home unless it is a short-sale. Your post doesn't mention that you can do so. Second, in terms of pursuing the current owners for pain and suffering, you should know that their breach of the contract to sell you the home, assuming that there is an enforceable contract to begin with, is just that - breach of contract. There are no "tort" type damages available for breach of contract. I would suggest just walking away from the deal as being bad, and move on to bigger and better things. Also, I'm not sure when it happened, but my condolences on the loss of your partner.
David L. Gibbs, Esq.
The Gibbs Law Firm, APC
San Clemente, California
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Mike is correct you need an in-depth consultation
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