Rosalina
You have excellent posts so far.
The truth is that in real estate only things in writing are true.
When you say "short sale contract was signed" we do not know what that means.
In California there is the Residential Purchase Agreement (RPA), and another related form is the "short sale addendum".
In the RPA in section 3, b) at the bottom of the page states when possession is to take place.

Normally if owners want to rent the property after the sale concludes, they sign a separate lease agreement. The lease payment is normally equal to the buyer's principle, interest, taxes, and insurance payments (called PITI). If the buyers want to occupy BEFORE the escrow closes, there is a form for that.

It sounds to me that the best person to answer your questions would be your Realtor. If they don't know how to handle the situation, then talk with their broker, who supervises the Realtor.

It is common for sellers to rent back, the problem is that the amount of the rent they would need to pay might be more than they can afford.

There are some questions that may not be clear in your contract. Settlement and possession are two different birds. Depending on your contract and state law, possession may not become effective until the deed conveys (recorded) and the seller is paid. Settle on Friday at 4:00 PM before a three day weekend the deed transfer and proceed disbursement may not happen until sometime the follwing Tuesday.

If the house sold yeterday as in closed yesterday, the sellers need to be out upon signing as the new owners take possession as of the closing unless specifications are put into the purchase and sales stating otherwise. the purchase agreement shold state when the sellers need to be out. the buyers should never sign unless the sellers are out or they are stuck with them. if the property has closed and teh sellers are still in possession, teh new buyer will have to evict them, they cant make the sellers pay anything if it wasnt already agreed upon before closing. If you just signed a purchase and sales agreement than the new buyer can make the seller pay anything until it closes. goo dluck working it out

Rosalina: The time they are allowed to stay in the house is set forth in the purchase contract. It states when the buyers take possession and was something that should have been negogiated as part of the sale. I am not sure what the short sale contract has to do with it. It is only an addendum to the purchase contract as to time frames as to the bank giving it's response on the short sale approval not on possession of the property.