Hire competent, experienced legal counsel. 

But we stay rented and have never once gotten a sound complaint. 

this newly identified risk mandates increased revenue (rent increases) to compensate for the increased risk of the government allowing tenant to not pay rent and damage unit with no legal means to get rid of the tenant.Just prior to the period in the article, CA passed statewide rent control on MF (starting at 2 unit) properties.  

I don't think it's worth trying to sue the county over 6k, it may cost more in legal fees.This was my first flip and it has been a school of hard knocks. 

There are several things to do legally after that.Every county and state is different as far as what they do with tax defaults, which is why you are getting different answers from different people. 

Please be gentle; I'm new at this and it's pretty complex :)Structure / Legal Details- we'd establish market value through a combination of comps from local real estate agent and an appraisal- attorney would establish all required "arms length" aspects including a mortgage at a minimum standard federal rate- LLC would pay us back based on a standard promissory note over 30 yrs Pros of selling to the LLC (I think)- A sale now would be the only time we'd be able to take advantage of the cap gains exclusion on this house bc we won't qualify for the "live there 3 of 5 years" rule due to the timing of our lease and our last time of residence. 

For example In Norristown PA, a nearby not good area, section 8 will pay $1300/month for a 3-BR, whereas free market in that area would dictate something closer to $700 perhaps.Paying for tenants is likely on the edge of legality, but I can understand the motivation.

(Want to be able to have option to legally pursue my costs)My questions:1.

Then it all goes away and the company has to eat both the past due amount plus their legal fees. 

For it to be considered a legal (4th) bedroom it must be 70 sq ft/ have fire escape so im thinking it would be better to list it on the lease as office/storage space.