No, but...

The problem rests both in the law and in human nature.

As to the law, there is no statute or case law in CA preventing lease-back to an owner, whether month-to-month or longer.

There IS a big problem if a former owner-now-tenant believes that they can repurchase the property at a later time. Worse, if there is any documentation to support this, it can be construed as a Security Device and that may have to be foreclosed on judicially to clear title!

The real issue is, in my opinion, the human nature element. If I once owned the house and now I'm still living there, I usually think that I "own" it and want to receive all of the benefits of ownership. Of course, when you want to sell and cash in, the former owner now thnks that you're selling "their" house out from under their feet. It's their attachment that is really the big problem.

This being said, I have rented to families of former owners. This is how I do it: I have a rental/lease agreement with another family member or, better yet, a friend of the former owner, but NEVER the former owner themselves. This doesn't exactly solve the emotional attachment problem, however it is easier to get the tenants out when that day arrives.

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