We are in the processes of purchasing the home we've rented for the past 20yrs under "short sale'. Since we are the one's purchasing the home do we need to pay rent? We are in the first stages, but overall everyone one knows that we are buying? So do we have to pay rent or not? Is there a law behind this one?

Some of this is Federal Law. Some is State.

Where?

Of course you have to pay rent to the owner, they still own it, so unless you made some arrangement with the owner to not pay rent, yes you pay rent.

The short sale can take months 3 to 6 months often and the bank does not have to even accept the short sale offer,
I have had dozens of short sale offers refused.

The owner of the property can merely evict you if you do not keep paying rent till you close on the property.

I'm in California. So since I'm in the process of buying the house we are renting Do I have to pay rent? Is their laws behind that?

Contract and rental laws. If someone else was buying the house, you still pay rent to the owner,

You have a contract to rent, you do not own it yet, and the sale may not even go though.
The other person still owns it, till the day and minute you do a closing.

So you have to honor and follow the rules of your rental agreement. I can not understand why there is even a question on it. A short sale is still a sale, the seller and the bank has to agree to the sale. The only difference is the amount paid will be less than owed. But until the sale is done the old owner still owns it. This is not a foreclosure but even with a foreclosure, you would owe rent till the day it is foreclosed

I agree with Chuck. Why is this even a question in your mind? The owner still owns the property. Until the sale is finalized, you owe him rental since you are using the property.

Since this is a short sale, I assume you aren't paying anything down unless its to reduce the amount of your mortgage. So the only benefit to the owner is to not have a foreclosure on their record.

I will say if the owners will agree to this, ( don't know why they should) but if they are tired of the rental property and want to walk away, who knows, but you owe it, till you either close on the property or the owners allow you to rent for free.

If you do not pay rent, they can evict you, and rent it to someone else until you purchase it and take ownership.