On the surface it suggest bad faith. Did you sign any title changes to clear the defect? If not, don't until you have a check in hand. IMO, I would call the state insurance commission and file a complaint against the title company and seek an attorney.
If you win you may end up with more that negotiated because of the alleged bad faith.
You should also have gotten your own independent appraisal to verify.
You should at least speak to an experienced real estate attorney.

