Do not allow the seller to stay in the property, unless you are prepared for an expensive and time consuming eviction.
The only exception would be to have a HUGE deposit, which in itself has problems.
Just don't do it, wait.
Real Estate Broker 38 years
You have received some very good answers below. The one thing I can add is be sure to speak with an Attorney right away who specializes in Real Estate law. Be proactive and find out what you will have to do if the Seller's do not perform and vacate the home as agreed to in writing. Identifying your options now will allow for you to respond quicker should the Sellers give you problems later. Good luck!
If they were planning to sell via HAFA (Home Affordable Foreclosure Alternative), one of their objectives besides avoiding foreclosure is to get relocation assistance
Their listing agent should have already submitted their HAFA application before or by the time the property was listed -- and not wait until after you've already had an offer accepted, you're in escrow, and about to close!
Please confirm that when the bank gave you a contract, that you mean you actually received the bank's short sale approval?
Make sure that your contract states that the property is to be delivered vacant, and stated how many days before close of escrow it should be vacated and for you to do your final walk-through. This walk-through is important to ensure the buyer that the property is in the same condition as when you made an offer -- such as are the appliances and light fixtures that are part of the sale still there? Some disgruntled homeowners strip or damage a property before vacating. If it isn't in the same condition, you may have the ability to delay close of escrow until the matter is resolved.
Don't worry just yet, they may have asked that question to see if you will rent the home to them after you take possession of the property. Eviction should be your last choice, kicking a person when their down won't make anyone happy but document all conversations in case it comes to that.
Contact your Agent on the HAFA situation, that could delay the Close of Escrow. If ALL parties agree to HAFA(seller and all Lien Holders) than when the Sellers receive $3,000. for moving expenses.
Always the Best,
Coldwell Banker Realtor
If it comes down to it you could do an eviction if needed. The seller may be strapped for money and a cash for keys is another option if they have not vacated the home by the time it closes escrow. Cash for keys is a cheaper option than eviction and it's basically giving them some money to move out and leave the place in good shape. You also most likely have the option of suing the seller for non-contract compliance if your contract states the terms of property possession. Of course trying to get blood from a stone doesn't really work.
Hopefully they will find another place to live soon and things will continue moving forward smoothly for you.