Legal Question in Real Estate Law in California

The landlord seems to be right. As long as there is someone in the apartment who derived his original right to be an occupant from you, rather than from the landlord, his presence is an extension of your lease. Not only must you be out, your subtenants (technically, assignees in this case) must also be out, in order for your tenancy to be wound up and the deposit returned. (At least I believe this is correct).

Mr. Whipple is correct, until you surrender the premises, you are a tenant. As long as you have people living there under your right of occupancy, you have not surrendered the premises. Your only option if you do not want to give in to the landlord's demands is to give both the sub-tenants and the landlord 30-day notices that you are terminating the month-to-month tenancy. Neither option is risk-free, since you may find you have to evict the sub-tenants just as if you were a landlord whose tenants refuse to move after a 30-day notice, but I personally think that is far better than being indefinitely on the hook for the rent and anything else the sub-tenant may not pay for, such as damage to the unit.