Hello Joanne and thanks for your post.
First, I am so sorry to learn of your situation, and you have demonstrated superior understanding by contacting a real estate attorney to assist you. Understanding contracts and providing you with solid legal advice with options can only be proferred by an attorney.
Now, lets talk about the practical aspect of this situation as I, in my wholly unlegal opinion, might suggest to you. Keep in mind that the road you choose will hinge greatly on how badly you want this particular home.
First, if the contract does not provide any provisions for the seller to stay in the home after close of escrow, then the seller has no legal right to the property after the escrow closes and the ownership transfers to the buyer as Joel pointed out below. However, the legal right to occupy and the physical act of occupying the home are two entirely different things. If you fail to come to agreement on the continued occupancy of the home by the seller AND the seller remains "dead set" on staying in the property, your own course of action will be an eviction of the homeowner from the home. This is both expensive as well as time consuming (45 days here in California), during which time, the homeowner is likely not to pay for any bills and can possibly damage the home. Since the owner is already in financial hardship, your likelihood of collecting the legal fees associated with the eviction and any back rent on the home are pretty slim.
Keep in mind, too, that the homeowner knows that 1) he might be able to cancel the sale, and even if the home is foreclosed, he'll still be able to stay in the home through about April--probably rent free; and 2) if you buy the home and refuse to let him rent, he can still stay in the home for about 45-60 days rent free until the eviction is processed and the sheriff forces him from the home. Either way, you lose, so wouldn't it be better--despite how incredibly offensive the situation may seem--for you to negotiate rent on the home.
Now, I need to caveat this comment by saying that it would probably be to your benefit to allow the homeowner to rent, but I also did not mean to imply that you, as the buyre, need to make this option comfortable to the seller--but rather that you make an option available. In this case, since there is no agreement in the purchase contract to allow rent of the home, you can treat this just like a "real" rental situation with a lease, first and last month's rent paid up front with a security deposit, which is not returned until you've confirmed that the home was not damaged by the tenant. In most cases, a seller occupying the home belonging to the buyer must keep the buyer "whole" financially, so he will be required to pay exactly what you pay for the home or property mortgage, insurance, taxes and insurance ("PITI"). In addition, you need a security deposit and first and last month's rent paid up front. Since the owner might want to decamp from the unit sooner than April 15, ask for payment of rent through April 15 and then refund what is not used when the seller finally vacates the property. By asking for a security deposit and first and last month's rent, in addition to rent during the occupancy period, you are ensuring that--if the Seller does not leave on time, there is sufficient funds to evict him AND the extra money will serve as incentive for the Seller to get out quickly in order to be reimbursed the funds that you, as the landlord, will be holding.
Of course, the final option is to choose to leave this transaction since the seller is being uncooperative, and to work with the listing agent to obtain reimbursements for your loss and out of pocket costs.
Always consult with your attorney regarding all of your options! Good luck!
Grace Morioka, SRES
Area Pro Realty