This means that the tenant occupant will not be evicted prior to close of escrow, and that the buyer must inherit the tenant and deal with the situation at the buyer's own expense. This is happening, largely, because of the new foreclosure tenant laws that create extremely stringent guidelines about how a bank who acquires a property through foreclosure can remove a tenant. In certain situations, the bank calculates the risk and expense involved, and decides that it is in the bank's best interest to lower the price significantly and sell the property to an investor who does not require conventional financing (generally an all cash investor, or one using hard money), and is prepared to take on the risk of evicting the tenant on their own dime in exchange for a bargain price.
It's important to also understand that in the vast majority of these sales, there will be no opportunity for inspection prior to closing, therefore BUYER BEWARE. It would be fool hardy to purchase a property like this unless the discount is substantial enough to absorb the worst case scenario of both condition and eviction proceedings.