The issue is not whether they owned the land, but whether they reserved for themselves a contingency in the event that they later discovered a problem with title or ownership. If the contract lets them escape under the circumstances described, then there would be no basis to assert that it was breached.
You can enter into a binding contract to sell something that you don't own. But you put yourself at legal risk by doing so, as if you do not obtain and convey the property you open yourself up to liability on such legal theories as breach of contract and fraud.Quoting jk