Pet Deposit Refund with lease renewal

[Raj Swarnam]

Hi , I Just bought my First Investment property with tenants in place. Current tenants are willing to sign a new 1 yrs lease starting sep 1st. They had a pet (Cat) last year 2014-2015 and not anymore .Tenant request the pet deposit refunded before they sign the new lease .  Should i entertain this request ,inspect the property for any pet damages and refund the pet deposit or hang on one more year till the new lease ends ? please advise

[JD Martin]

If they paid a deposit, that is not a form of income; it is to cover damages due to the animal. If there are no damages, and there are no animals, there isn't any reason to keep the deposit at all. If it was a non-refundable pet fee, there's nothing to return. The language in the original lease should be clear regarding how these funds were allocated. 

If they have no intention of getting another animal, I would return the money if there's no damage. If there is damage, document and price before returning any of the deposit.