How do I handle the security deposit?

Or somehow deducting from deposits the constant AC repair costs?

The deposit remains in place until they are out and is treated like a normal termination.About 90% of tenants pay the fee.

Old PM will not give back escrow deposits until I threaten them from my RE lawyer.  9. 

If you don't want to deal with the first tenant, you can do a really large deposit and try to get it delivered vacant, but it is a big risk for the current owner in case you back out of the deal.

although I jumped in not know that they would try and cash my deposit check having a very good understand of principles, law and finance is paramount to success.  

If your contract with the buyer has a drop dead date and they do not perform you can move on.You also need get get POF from your buyers and a non refundable deposit.

People are very wary of being scammed so they're reluctant to put down a deposit when they can't even see what the furnished unit is going to look like. 3/1's can be hard to rent as MTRs.

Consider all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.5.

Few more points:Their lease is valid till May 2025.This is the first time she even told me about mold.In the email she did ask me to settle the lease.I have a little less than a month of rent as security deposit, which I am ready to settle without any additional penalties for abandoning the property.At this point I am okay with her leaving the place, just I want to get the control of the property back to fix the mold issue.History:1) Recently the AC has been replaced and after that there was some intermittent issue with the installation (temp doesn’t reach target intermittently) and I had to call the tech back 5 times to finally get it resolved.2) Also last month I replaced electric range with Brand new Electric range.3) Two months back she said the refrigerator was leaking, I asked her to send picture of the make and mode of the refrigerator, but I never got a reply back.4) Also for last 4-5 months she has been asking me to send her 5-day notice so that she can claim reimbursement, I was sharing a document and she was paying the rent a little late.