Seller has purchase contracts with 2 different buyers. What now?

[Jonathan Nguyen]

So I have a rental property and the house next door has always been an abandoned looking eye sore. I tried to contact the owner to purchase with no luck but finally he has reached out to me. We have agreed on a price and signed a purchase contract and I've put down a deposit. Title work is commencing now. HOWEVER, he calls me yesterday and says he signed a purchase contract to sell the house with another guy a few weeks earlier for 4 times less of an amount as I'm paying him. He says he was negligent upon what he was signing and also received no deposit. He is due to close on the house with me next week but the purchase contract with the other guy is due to close 2 weeks from now. 

If we close next week on this house am I on the hook for anything legally? I don't want to pay the guy then dump money into rehab and end up having to give the house back and the seller disappear with my money. Or is all legality and repercussions on the seller for reneging on the first buyer?