Why fight City Hall?

A true tenant is at least fighting for their ability to have shelter.Also, presumably that company will ultimately be putting someone in the unit, which you may have no control over, since you leased to the company.  

You have to check and balance the results but if you can get the ball in the redzone vice fighting to get it down field from your endzone, then that can be a game changer.

Can you afford to fight a claim?

I'm currently working on my goal to purchase my first apartment building in the Twin Cities metro area this year and am fighting analysis paralysis & concerns about making a bad deal. 

Had to fight and wade through a lot of twist and turns: my closing date got pushed back 7 weeks!

You want something here, you either take your chance the tenants will not fight you on the deposit and perhaps win in court or you just move on and rehab the property and get it rented. 

This is not what you want to hear but you cannot fight city hall.

@Patrick Philip try combining your heloc with a hard money loan so you can work in the move up market instead of fighting against everyone with $100k in their bank account in the sub $100k market.

Fight through it will get better.