Buying a property from a relative (or in law) is a “non arms length transaction”. They are legal, if disclosured to all parties, particularly the new lender if a mortgage is involved, and even more so to the lender who is being asked to approve the short sale. It would be mortgage fraud, with potential criminal consequences, to not disclose your relationship. It is also highly doubtful the lender will approve you buying your brother in laws' property on a short sale. There are far too many opportunities for false sales, for a party buying a home and then giving/renting it back to the previous owner, etc. Tread very carefully if you try to present an offer, and emphatically disclose your relationship. Odds you can pull this off: About the same as hitting the powerball.