Deal in the works. Or maybe not?

[David Rawls]

I just got a house under contract. The person selling (we'll call him T) obtained the house under a 3 year land contract with a balloon, he put 50k down on a 200k house. He told me he the land contract ends at the end of November. I spoke with the original owner (We'll call him S) of the house and he told me the contract expired October 31st. T hasn't paid the balloon and is living there without permission.

I'm buying the house for 130k. T doesn't want me to give any numbers or details to S about what's going on, other than we have it under contract and are buying it.

My question is: Does T have the legal right to sell the house to me? He hasn't been foreclosed on so I'd like to say yes. 

Do I owe anything to S? What, if anything, will I need to disclose to him?

Thanks for any input!