Cancellation of Sale Deed and Re-Register

I am buying a 3000 sqft plot which has small house (2 rooms) in it. It has an assessment in the municipality and allotted house number etc.. It has electricity and water connections as well. The current owner who is selling me this property did not have mutation on his name, the assessment details in the municipality shows previous owner's name only. The current owner didn't apply for mutation as his intention was to resell it and the current title deed doesn't mention about the house in it, the title deed was registered as an open land only. In fact, it was only the previous owner who got the assessment in the municipality. Ideally the current owner must have registered it as a house but he continued the registration as open land only. I have already paid 40% of property value to him. And now we have realized the issue that there is no mutation on his name and title doesn't mention about the house in it. I requested owner to get mutation on his name first and then register the property to me otherwise I have expressed my intention to cancel the agreement and get the refund. He tried to get mutation on his name in the municipality but there is a resistance as the title deed doesn't mention about the house details in it. It is not going happen easily and might take long time. Hence current owner came up with below option, He convinced the previous owner and decided to cancel the current title deed by making and registering the cancellation deed and the very same day they will register the property as a house on my name directly from previous owner. I checked in the registration office and understood that there are such provisions for the cancellation of sale deeds. Kindly advise, 1. Is it safe and legal to buy the property this way? Will I have any complications in future if I have to resell it or for taking house loans? 2. Do I need to mention anything about the cancelled sale deed in my new title deed? Will the current owners have any rights after making the cancellation deed? 3. Please give me inputs on any things which I need to take care of, in this process.