You can work 12+ hours a day trying to make it big where others have already found and fulfilled a need and end up with nothing to show for it. 

What are the legalities in regards to drafting a contract that one is not able to fulfill.

Often times you will find that there is an inquiry sitting in a queue somewhere waiting to be fulfilled and your loan representative had no clue until you asked.

Because ownership of the property doesn't technically get signed over to the buyer until the contract is fulfilled (paid off), what is the best course of action moving forward?

when someone is buying a home from me and has low down payment and lower credit scores IE under 700  you know its not in the bag until you get a clear to close I have many buyers fail at the last minute when underwriters made further requirements they could not fulfill.   

Cheap (read D-F class) properties fulfill the 1-2% rule very easily. 

They entered into a contract to sell they had no intention of fulfilling and fraudulently took this families money.  

I wish I'd known that extreme frugality is not fulfilling.

In theory you're correct you fulfilled the letter of 1031.  

Best Wishes as fulfilling your dreams.