Drainage is going to be of major concern for the life of your lawn. I would till in compost on the existing soil while removing rock and have that as a base for the addition of a sandy loam topsoil.
Can you terrace any part of that slope(right hand side) and still have lawn to suit you needs?

Is the drainage problem going to be from the soil or the slope?

Terracing would not really work out as the slope is not that much.

I was questioning the drainage of the soil. If the water is always running downhill rather than soaking into a rich loam, grass is going to struggle.
I was just thinking of helping the water to be on a more level plane with the terrace idea.
What do you find if you dig a hole and fill it full of water?
How quickly it drains away will give you a lot of information about what topsoil to add and whether to mix it into existing soil or not.

You should plan to seed in late August - Mid October. That is the best time for your lawn to get a chance to establish and be ready for next year. In the meantime, you should get a truckload of Compost dropped off and rototill it along with quality topsoil at a ratio of 2(topsoil) to 1(compost). If you have the funds, Id go even heaver on the compost. You should be aiming for at least 6 inches of loamy, high % of compost soil. Especially, since you have rocky, clay soil similiar to us in New England. Once you have this complete, you should gather soil samples and send them to a cooperative extension office for testing. You need to know the makeup of your soil, especially PH, in order to grow a healthy lawn. Most states have their own extension offices, but I have heard that Cali no longer does this, do to budgetary issues. I send mine to Umass, and they accept out of state samples, but maybe you can find somewhere closer.

I wouldn't be concerned with that slope, the grade in minor. When the seed is first planted you will want to water 3 times a day, but just for a short period of time. The goal is to keep the soil damp, but not soaked. Once established, your goal should be to water deeply 1 time per week. Use a tuna can to test how long your sprinklers need to run in order to catch 1" of water. This encourages the grass roots to grow deep and will help them hold onto that slope.

Finally, I would consider top dressing annually with compost and applying compost tea as well. This will ensure that you don't end up with an erosion problem later on.

Good Luck
Shawn

Here is a link that might be useful: Umass Extension Office

When you say, NE CA, do you mean Truckee or Alturas? This is just a curiosity for me.

With your shade you should be looking at varieties of fescue that do well in the shade. Early fall is the time to seed new fescue. That will be coming up for you in about late August.

If you can remove large surface rocks, you should be fine. Just about the only time you need topsoil is when you want to change your drainage. You can improve most any soil with organic fertilizers.

I would not rototill. Rototillers lead to a bumpy lawn surface when the fluffy soil settles unevenly. The settling process takes 3 years once you till it, so you get to really hate your lawn a long time before you can really fix it. If you want to apply compost, do it on top of the new grass.

Is that pea gravel in your terraced walkway? Is it chipped or rounded pebbles? If it is not chipped stone, I would suggest you scoop it out now and save yourself years of misery with that. Chipped stone will interlock to form a solid surface. Rounded gravel will never form anything and will be a headache as it gets shuffled out into the lawn.

@dchall - I have to disagree about using a rototiller and strongly disagree about topsoil only being used for drainage. If you go crazy with the rototiller, you could hurt the soil structure...but that would take some effort. The only way you would end up with a bumpy lawn is if you didn't use a roller after. If it is rolled, there would be little to no settling.

As far as topsoil/compost goes, your best opportunity to get it right is the first time. Most contractors leave very little topsoil and as a result, the lawn looks ratty. The only way to fix it is to start all over or slowly over many years top dress with compost, but that is a slow process, because you can only really add about 1/4 an inch p/year without smothering the grass. I would argue that putting at least 6 inches of topsoil/compost is one of the most important steps to a healthy lawn.

Not trying to be argumentative, just want to make sure this home owner gets it right the first time.

First off, thank you all for taking time and responding. I will try to get all questions answered. We are in beautiful Burney, CA. We are a flag lot at the edge of town. The town is to the NW and the rest is Southern Cascade awesomeness.

The gravel is limestone and chipped, not road base, but pretty solid.

This is a low budget project. As a school teacher on summer vacation, I have more time and muscle than money. It is just me and the boys all summer while mom works some extra hours. We understand it is best to seed not in the middle of summer and we have no problem with that. Getting the ground ready and sprinklers will take some time.

We really do not have a lot of shade. The picture was taken after 8PM. The area in question has full southern exposure and gets lots of sun as it moves across the sky.

To be honest, I do not know how much clay is a lot of clay. I do not we have a lot of rock. The ground sustains a ton of plant life, from big cedars and pines, huge manzanita plants, scrub oaks, and many, many wild flowers and weeds. Drainage is really good, in fact this whole side of the mountain does not have a above ground watershed. Volcanic soil.

Isn't there a mason jar test I could do to see how my soil is?

There is some confusion on the advice I have been getting here and on other sites. I would love the idea of removing rocks and using the native soil and top dressing. Is this just based on how good/poor my soil is? Do I just remove rocks and seed?

There was no contractor to take off the topsoil I built our house and the area in question was untouched by heavy equipment (expect to dig the water line to the spigot).

And yes, I would like to get this right. I have had 2 others that have given the same or similar advice as dchall. It does sound like an appealing option.

If you take shortcuts on the preparation of the soil, your lawn will not be nice. It's the foundation for the grass to grow on. I have attached a link to one of the best books I have read on lawn care, Organic may not be your thing, but the soil prep is the same no matter what. The author actually goes so far to say not to even bother trying to grow grass if you don't have the time/budget to ensure a proper amount of quality topsoil and compost.

You certainly can just sprinkle seed, water, and add topsoil for the next 5-10 years, but I'm not sure why you would want to try and do it that way when you have the opportunity to build a solid fountain from the start. I speak from experience, as I have been adding compost and compost tea to my lawn year after year to supplement the lack of topsoil that was used by the previous owner. Now after 5 years, the organic matter based on soil tests is finally starting to reach reasonable levels.

P.S. - You can preview this book on Amazon, so if you don't plan to buy, please read page 75 on soil prep.

Here is a link that might be useful: The Organic Lawncare Manual