Excellent point. Unfortunately if someone is sufficiently retarded (I’m not afraid to use the word!!) to buy a house with this specific encumbrance in the deed, I doubt that first-sale is a defense.
I meant it to show how absurd their arguments are. Also it’s a good defense to this practice becoming any sort of accepted legal doctrine in the future, where they could force this “royalty” on owners even without written encumbrances.