My Grandmother owns a house that she rents out. There is a family of 3 Mother and 2 teenage daughters living in a small 2 bedroom house. There was no lease agreement signed, and they have been late on rent more than once. There is also suspicion that another person could be staying there as well. My Grandmother wants them out of the house so she can rent it to family, but does not want any drama. How can she go about evicting them, or asking them to leave?

Definitley do it legally, go to the courts and find out the correct legal way it needs to be done. Each state is different and I am not sure of the process in KY, but the courts will help you file eviction papers and do it the correct way so your grandmother does not get in trouble for doing it the wrong way.

She needs to give them a written notice that their tenancy is terminated and they must vacate within 30 days. If they haven't left within that time then she has to file a lawsuit for eviction.

The Kentucky Landlord/Tenant Guide is at Kentucky Landlord Tenant Guide

Well first don't own a rental house if you don't want drama, here will always be drama.

Next "family" the worst people you can normaly rent to. They feel they don't have to pay more often than not. In my 30 plus years of renting, the worst, the most very worst renters I ever had were family.

But she will need to give them a notice to move out, if they don't move out then you have to file for a formal eviction in court