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Un authorize occupant on the premises

Recently I discovered an unauthorized occupant living in the garage of my rental unit. I wish to give notice to my tenant that this situation is a clear violation of the lease agreement and that city and state laws prohibit shouldaccommodations. What should I do. How best to proceed on this matter?
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I would send them an eviction notice stating their lease violation, and demanding they correct it. In California it's a 3 Day Notice to Perform or Quit (http://www.ezlandlordforms.com/documents/3738/). If they fix it, great, if not, you can then file in court after the 3 days are up.
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