If I approve it, I still plan to do a background check on the new tenant, but would there actually be any other agreement between me and the new resident in a sublease situation?

Is there a timeline for an estoppel agreement to be completed?

Should I simply keep them on the month to month agreement they have currently and have them sign the new lease in 60 days?

In addition, set all of your expectations upfront and stated in the lease agreement so there is no confussion whatsoever of what is required.

@Thomas J Mele I used Zen business to form my first LLC, however, I did hire an attorney to refine the operating agreement.

If anyone is willing to pay it forward and point me in the direction of an expert who would be able to guide me through creative options for company structure, ownership, operating agreement, etc. based on our specific circumstances, I would be most grateful and delighted to return the favor in the future. :-)

Should all adults who will be living in the property always be on the lease agreement?

The have to calculate the average monthly rent in the location UNLESS you have a rental agreement. :) YES your credit will and has to be pulled. 

@Lynette Pang CA defines eviction as removing a tenant because they violated the tenant agreement.

As I stare at a lease agreement ready to hurl thinking about having to rent rather than owning, since we HAVE to find a place to live, I need your advice.