Yorkies are difficult to potty train...if that's what they were talking about? But they're very intelligent dogs. They learn tricks and commands in NO time - as long as the owner puts the time in. They don't come to you trained! lol
as for being territorial...I've never heard of that. They definitely bark when someone's at the door (or walking by the house, or starting their car, or when a leaf falls 6 blocks away

), but I don't believe I've heard of a viciously territorial yorkie.
They sound like very uneducated dog owners, IMO. The dog is completley untrained and they want to breed him. I don't doubt that they're good people...but some people just weren't meant to have dogs.
I'd like to remind you that you're on a yorkie site, so I highly doubt you'll find anyone who will get on here and say "You're totally right! Yorkies are nasty!"