Legal Question in Real Estate Law in California

Your further information doesn't change the answer. If they don't like it and don't pay rent, give them a 3-day notice to pay rent or quit, and if they don't pay, file an unlawful detainer action and evict them. As for the options, I don't know what kind of broker they have but they are simply full of BS. What you are talking about doing makes no sense in terms of how real estate transactions should be handled. Why is the parents' broker giving them ANY options? You own the house. You are the seller. You set the terms, not some broker who isn't even your broker. No way to tell if it is intentional or ineptitude, but the broker is trying to screw you. The simple answer is your Option #2 is not only crazy; it's illegal. It is a breach of your loan agreement and deed of trust with your current lender. It would allow the lender to call the loan and foreclose, even if you are current on payments. It is illegal and grounds for foreclosure to deed away the property without paying off the loan at the same time. The only way to do this properly and safely to protect your interests is to enter into a contract for sale, with an agreed price, open an escrow, have your inlaws obtain a loan, your husband signs a grant deed at the escrow company, and when the new loan funds, the current loan is paid off, the grant deed is recorded, a new deed of trust is recorded between your inlaws and their new lender, and your current lender reconveys the existing deed of trust. Presuming your inlaws are paying at least some cash down in excess of your current loan balance, the escrow company will cut you a check for the difference. End of deal.