Property is exempt from STR permitting because the jurisdiction considers it to be a commercial lodging establishment.We've been pursuing an SBA 504 loan for it, which was going well until we discovered that the sellers have operated it only part-time the last 12 years -- intentionally blocking 60% of available room-nights because they just weren't up for running it full time in their retirement. 

And there could be some carve out exemptions for seller financing and if so then that would possibly need to be filed with the California's DFPI.Research local escrow companies and banks to see if any of them do contract loan servicing.

If you are moving it from a personal name to an LLC there is an exemption form for taxes you also have to fill out and file along with transferring the deed.

I can't see a reason in the world to sell it to an LLC now since you want to maintain your husband and wife tax exemption on the future capital gain as a primary residence, but since it's rented now you may want to consult on that.

SFH are statewide exempt from rent control due to costa Hawkins.   

Before that it was primary residence since January 2019.Do I need to sell it this October to avoid capital gains tax to qualify for 2 of last 5 years exemption for capital gains (up to 250K single, 500K married filing jointly)?

I was advised that the depreciation taken during the years it was rented is not excluded from the exemption. 

@Gladys Villa we chose to buy a fixer-upper in a great neighborhood, live in it for 2 years while renovating, sell with the tax exemption (now up to $500,000 profit tax free), then repeat until our kids needed more stability for schools.

@Daniel TorresWhen you mention “investors” that plural means in most instances you would need to file for a sec exemption unless it’s one investor for one deal (or in CA can do trust deeds).It’s up to you whether you offer debt or equity.

@Butch Greene  The buyer/borrower needs to get exemption from their lender.