I work for a Real Estate Attorney / Broker.
You may want to have a consultation with an attorney to find out exactly what to do.
Have you tried to do a mod? Who is the lender?
If you not collecting rent they should be more than willing to work with you. If you give notice you should not have a problem showing the home.
1) Joseph is correct, the written rental agreement between you and the renters remains in effect and should not be affected by the short sale. You should be collecting rent!
2) You may find this document to be of use to you: http://docs.Steven-Anthony.com/Landlord-TenantGuideCA2010.pdf
Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
I reccommend you hire a real estate attorney or eviction service to help you with your problem. I also recommend you revoke the non-payment of rent agreement. I assume you did this in good faith so that the tenants would cooperate with the short sale. If they are not living up to that you should be able to revoke the agreement.
Cash for keys is an option as well but right now the tenants have a pretty good deal, free rent for as long as they can hold out. Once you start the eviction process they will feel some pressure to cooperate.
I agree with the 3 other agents. You are going to need to make them a "cash for keys" offer and make it worth it to them to tear up their lease. If they won't agree to that, your best bet is to get a real estate attorney involved.
On the other hand, it may be cheaper to follow the advice of the agent from Florida and offer cash for tenants to vacate and leave the property in good condition.
I believe you have created a situation that may require a RE lawyer to untangle. Agreeing to not collect rent and then still allowing the Tenants to remain is very problematic. Evicting the Tenants and then trying to Short Sale the property would have been better for you.
You need to talk with a RE lawyer! Trulia is not a legal forum!
It is hard enough for a REALTOR(R) to find a suitable buyer without the additional constraint of a difficult/hostile tenant.
Do yourself a favor...... get the tenant out. Your sale will close faster!
Best of luck..... it can be done - just choose an agent who is familiar with the process.