I have not seen a buyer have to pay taxes in a short sale. They may ask a buyer to do that...but that does not mean it can't or will not close when the buyer says no. Usually on an IRS lien, it can be removed from the property. As to real estate and escrow taxes, the lienholder usually backs up their payoff requirements.
Suggesting the buyer should pay them is not the norm for the agent for the buyer, even though the agent for the seller may ask them to.
I don't know how those are handled if you buy AT foreclosure at the courthouse steps. So if your are buying at the foreclosure, you may want to ask the Trustee Representative. My clients only buy pre-foreclosure or post-foreclosure and not at the courthouse steps.
Any unpaid insurance policy is usually cancelled, whether it is auto or home insurance or a Master Policy of an HOA...lack of payment normally = no insurance.
Taxes are prorated as of the day of closing. I'm not sure what you mean by master insurance. If you mean home owner's insurance you will have a new policy as of closing. If the seller's property is uninsured at this time and something happens before closing then they will not be coverage.
Eventually, delinquent condo fees and deliquent taxes will hurt every owner becasue when a property goes on the market, the assoiciation has to answer a questionaire concerning these issues. If the numbers are too high, prospective buyers won't be able to get a mortgage.
I am not sure what happens when they don't pay the insurance,, let us all know, I am curious.