Thanks for all of your advice and this is how I feel as well.

However, my concern is that I don't have any paperwork on that car besides the title... I didn't finance it or anything. So I can not recall what I signed 4 years ago... yes, I know I should read what I sign, but at that point I did not even know what the hell that means. So to the best of my knowledge I was never aware that it had a problem... and I had an official clear title so I had no doubt that it is fine. When I asked the dealer how did it have a clear title if it was salvaged and the dealer told me "well, there is such a thing as title-washing".... well, yea... there are things like money laundering and drugs trafficking as well but I don't do them!!.

I guess I should call a lawyer and find out what I should do. My first thought was to tell them that they had three days to run this report before they signed the deal so it is not my problem now; but I do not want any legal hassle since in the long run it may cost me more money and time.