you should have posted your question on FB, ask for moral support from your FB friends.

One of legality and one of morality. 

I have morals and values and handle myself as such even in real estate.

I figured morally, to live with myself a bit, to do what most people said and return the majority of the deposit.

Morally i'm ok with saying that although legally i'm not sure how it would play out as its linked to what she is saying could be trace mold in the home.

Contractor have the knowledge and tools/skills to steal@  Cost me $2,500.Moral of the Story-- If they are reputable, they will at least split the cost or pay for all of it as it was their error, or if they aren't--- consider this the cost of your lesson and find a trust worthy contractor.   

@Geoffrey Morales  Good question, everyone is in the same boat...I just finished repositioning / leasing all vacant units in the latest acquisition and stage 2 was to increase exciting rents. 

Thank God you actually spoke with a good lawyer.I may also add that you could let the law student know that if they file a frivolous lawsuit or otherwise behave in an unethical manner, they may not pass the moral turpitude test required of the Bar Association. 

It's a deep moral question of mine, hence why I came to all my friends here on BP.

This question seems to be more about morals so let me help push you in the right direction.