how do i build/buy on an occupied residential lot??

Hi :)

First- Save your game. In case something goes wrong. :)

In Edit Town, Evict the family- they'll go to the clipboard to the left... Go into the lot to build. The houses is now empty so you can build.

After building, back in neighborhood view, click on the family on the left of your screen and then place them in the house just like when you started. :)