After they check Craigslist to see if they can find a better deal LOL.But, just FYI, if a tenant starts threatening that there are problems and hinting about suing - you should know, that a judge would look favorably on you giving them the option to move if they're not happy.  

Now she's a tenant, and now you're in a position to have to watch her and give her warnings, and threaten to evict?  

That means they owe me a net total of $300.Now they're threatening to sue.

LOL... but you can take It up with Johnthe ugly side of landlording.. its rare that I ever give a deposit back and I mean rare.they yell they cuss they threaten but they also do a bunch of damage.. most of them are just wind bags.now the one's that actually hand the property over and have lived there like responsible adults I give those back.. but most of my mid west stuff they never even ask. 

You must always remember, threatening memos seldom change anything.

When I ran a property management company, tenants threatened us with lawsuits all the time without anything ever coming of it.  

Any tenant even threatening legal action against me gets targeted for a termination.  

She's now threatening to sue me for for not returning her deposit and for damage to furniture which she claims she incurred as a result of the squirrels and mice.  

At this point, you may still be able to give it try since  she may be literally threatening the deal. 

In fact, here it is:https://www.dca.ca.gov/dca/publications/landlordbo...A book you should own is this one:http://www.nolo.com/products/the-california-landlo...It was my bible and I used their contracts, too, which are included.When tenants start threatening to sue or take legal action, it's best to remain calm and just say that if they choose to do that, that's fine, and you'll be happy to abide by the judge's decision if they decide to take the matter to court.