If the owner does not sign the contract how will you enforce it?

We are encountering houses for sale in our area where the listing agent informs us that the owner of the house has entered into an agreement to sell their home to a third party and it is this third party that has now listed the home and will be negotiating the transaction with our buyer. As you might have already guessed, these listings have short sale contingencies.

Here is how the conversation goes once the listing agent makes their disclosure to us.

Me: So the actual owner will not be signing the contract to purchase?
Them: No. The person(s) that have the option to buy the home will be signing the contract.
Me: How can the person who only has an option legally sign the contract?
Them: We do this all the time. The owner of record has agreed to sell the house to the person with the option and the person with the option will sell the house to your buyer. It will all be closed at the same time.
Me: Is this legal?
Them: Call our title company. The title representative will tell you “we do this all the time” and everything is legal.
Me: Does the owner’s lender know what is happening?
Them: The bank does not care; as long as they get the short sale price they agreed too, they are happy.
Me: So then we have it in writing that the owner’s bank knows what is happening?
Them: Call the title company; we do this all the time.
Me: If it is legit, why can’t we get the owner of record’s signature?
Them: That is not how we do these types of transaction.

I am not an attorney so I will leave it to those that are to determine the legality of transactions like this. In my opinion it just seems wrong not having the actual owner sign. Also, if it is legit, why doesn’t the owner’s bank know? We strongly suggest any buyer that may decide to enter into a contract to purchase a home with someone other than the person on the deed seek the counsel of an attorney. Since the owner of record is not signing the contract to sale, one of the questions I have is how would the buyer enforce it and against who?

Whenever I hear the phrase “we do it all the time” as the main answer to my questions and concerns, I get nervous. So should you.