Yep, the IRS specifically rules out buying from relatives. That prevents people from "swapping" houses just to get 8K credits. It also is in acknoweldgement that most homes sold between are not at retail price so the buyer is already getting a break in most cases.
As far as death, I am not sure. If it is still under his "estate" then it probably is a no go. If the house has been transfered to someone elses name than you MIGHT be OK.
As far as asking the LO, you need to call the IRS and ask them and have all the current info (who's name the home is in now, etc). A LO rarely knows the minute details, just the general guidelines. Any decent LO will tell you to call and verify through the IRS. Anyone who tells you that you are good to go, does not want to risk loosing the sale by giving you a maybe. They are not the ones out $ if down the road the credit is not approved.
