FIrst, this is a question for a tenant's rights attorney. In a normal sale, the buyer will indicate if they want to receive the property vacant at close of escrow or if they are willing to take it subject to your lease. This will be in the offer to purchase and the owner will either accept the terms of the offer or counter. The same should hold true in an offer on a short sale. So, once your landlord gets that offer, they will be able to let you know if you will need to move.
You should also be aware that short sales take a long time. Some lenders take as much as 60 - 120 days to approve a short sale, even with an offer on the table. During that period of time, the buyer usually finds another property and walks away from the short sale. The seller waits for short sale approval and then tries to roll a new buyer into the transaction. The short sale lender will usually have to go through another approval process, thankfully shorter than the first but still around 30 days. So, you could be living in the property for a long time before you have to start worrying about where to move.
Lastly, if you have a decent credit score and about $5,000 for a down payment, you might be able to buy the house. On an FHA loan, your payments, including FHA mortgage insurance, taxes and property insurance will be right around $1000. If you would like to explore this option further, please fee free to contact me. Dare to Dream.
Real Estate Consultant
RE/MAX Palos Verdes Realty