Though we are still over a month and a half away from our reservation date, we lost our entire deposit.

So chasing money is an endless black hole.

You do not want to expose yourself to the unnecessary (and endless) liability of hiring unlicensed workers for what you're describing as full home renovations.

They also have a dog  which was not reported and no pet deposit was received.

I would require a signed lease from them as well as a security deposit. 

Need proof of insurance, deposit etc. etc.

@James WiseHey, I just want to say I was told in another forum post I am mean and it was irresponsible for telling a potential homebuyer who did not have earnest money deposit that if you don’t have the money for earnest money deposit that should not be buying a houseBecause a 23 year old living with mommy and daddy’s mansion says they buy all the time with no money down….So why you trying to kill their dreams - Lightbulb moment!!!

So just recognize this could be lengthy process if they default.If it was me, I would take it as a non-refundable deposit with a letter of intent and a purchase and sale agreement that the money is a down payment, is not refundable and they must execute the closing by a specific date otherwise they forfeit the money.

Theoretically, I could advertise "no deposit" and charge something like a $500 move in fee, which is non refundable.

Someone I know owns section 8 properties, he doesn’t have any issues and the rent gets deposited directly to his account.