Legal Question in Real Estate Law in Illinois

There's a little thing called the "Statute of Frauds" which says, in relation to your situation, that contracts for the sale of real estate MUST be in writing in order to be enforced, meaning you would first have to go to court and then, if the ONLY evidence you have of this ORAL agreement are your cancelled checks paying the mortgage, that could easily be said to be the equivalent of rent and NOT a sale agreement, and the Statute of Frauds would apply and you're out of the box. You should sit down with an attorney and produce ANY other evidence of a sale agreement, but as a general rule you just got fooled by his family.

There are some options here, but the best advice may be to move on. You would have to establish a contract through evidence that the parties have performed on the agreement. Generally, oral contracts without evidence of performance by the parties are not enforceable.

If they are short selling, however, that means that the property is not worth what is owed on it. So, you would be paying for something that has no value at this time and you would have to be counting on the future increase in value in addition to fighting a fight (possibly a costly fight for all) that will just create more family tension. In addition to the impact on the relationships, that could impact future considerations financially. You may be left out of an estate if there is one in the future or removed as a beneficiary of life insurance policies, pension plans, etc.

Usually, with a short sale, the owners will not receive any funds. Sometimes they are even left having to pay a deficiency. So, it is unlikely the parents are doing this for some gain. Occasionally, there is an incentive offered of a few thousand dollars. If that is the case, perhaps they would compensate you for the time and money you have invested. I would still ask, however, whether it is worth straining the relationship even further. Keep in mind, that you would have been paying something to live somewhere regardless. So, how great is your loss in this investment into a financially upside-down property?