I'm not an expert on California law, but I believe you are allowed to give a 60-day notice of termination for a substantial remodel.

Start sending the proper notice allowed by law.

Want to give you kudos for using a servicer as there are very strict rules to follow to comply.

I appreciate the insight that you and John offered regarding the lack of value in the business itself and strictly the land + improvements.

Interested in getting some extra income with converting the extra space in the basement into a rentable unit.Basements in a one-family home can be lawfully rented only if the following conditions are met:Compliance with the Housing Maintenance Code for minimum room size.There is a minimum ceiling height of 7 ft.The walls, as high as ground level, must be damp- and water-proofed if HPD determines that subsoil conditions on the lot require it.The basement is occupied by one family and does not include boarders.Every room must have at least one window.The bottom of any yard or other required open space cannot be higher than six inches below the window sill of any required window in the room.

their threat demonstrates their ignorance of the laws and expectations.  

They may take an interest.Some of those people might actually be more aggressive about enforcing existing laws.

A law suit from a tenant can put your other assets in risk if they are inside that LLC. 

And consulting with a local attorney to ensure compliance with state-specific real estate laws, plus making sure you have the necessary permits, is a smart move.As you start, also look into state-specific rules regarding contractors and renovations, especially if you plan to flip in different states from where you reside.

There is a lot more state regulations and lending laws change when 5 units or great.