Tenant purchased a dog and is now in breach of contract

[Derek Sperzel]

We have a tenant that moved into our old house, and she has been there almost 3 years. She takes good care of the property, has a young family, and seems to like living there. She is currently on a month-to-month lease, we haven't raised rent since she moved in, (currently pays $775, and market is closer to $850). She consistently pays a late fee of $60 per month and did so 11 out of 12 months last year, essentially bringing the rent up to $830 per month for 2018. I drove by the house yesterday, and found that they've added a member to the family (see photo below). In the original lease this tenant signed, there were no pets allowed on the property. I contacted the local management team to get their thoughts, and they told me I can give her notice to vacate within 30 days for breaching our contract or to charge her a $300 one-time pet fee that is non-refundable.

Frankly, I do not like either option, and I'm hoping the BP Community might have some suggestions.

Thanks in Advance, Derek