True, the bank has to and will get a sheriffs officer to get you out, especially if you are NOT paying rent.
In cases where the house was being rented and there is a lease to prove it banks must abide tenant law and thus can't just kick you out. HOWEVER this doesn't appear to be the case with you.
Yes the bank must be vacant for a bank to sell, heck they need to evaluate any hazardous conditions and secure, repair or disclose accordingly.
It is doubtful that your daughter will be permitted to purchase the home, the banks usually have disclosures as to family members being able to purchase the property but if she's married with a different last name and hasn't lived in the house herself the banks would never know.
FYI: NOT RECOMMENDED, it's fraud.