Check your Management Agreement with regards to early termination penalty, but for that egregious of an oversight, I would fight him in court if he assesses the ANY penalty. 

You were requiring a "surrender" of the deposit in full, and that probably would violate local security deposit laws in most areas.The rest of the post was about the reaction to being told to surrender - an "alpha type" individual won't like hearing surrender, and they will fight.

. - But this is all assuming you have the proper documentation, which you don't seem to have.You can roll the dice but if they fight back your gonna be pretty lucky if you don't lose it all and them some.

Now granted, the color may be harder to cover and may take more time and cost, but the judge wont let you charge the whole cost to the tenant...a portion at best.Same with holes in the walls....if we are talking nails, tacks, etc and the tenant has been there a few years, that's considered reasonable....to expect nothing is not reasonable........ if the tenant attempted to FIX the issue without your approval and made it worse, then you can ding them for the extra work.There is a big difference on what you emotionally THINK/FEEL you should be able to hold the tenant liable for and what will actually hold up if they take you to court.My eviction lawyer often tells his clients to go ahead and try and charge for that stuff.......many tenants wont put up a big enough fight to take it to court....but if they do, you will lose so be prepared to pay it out

The task of fighting for that as a standalone unit is cost and time prohibitive.  

We are trying to fight it but the appraiser is being stubborn.

So it would fall to Cozy to be the middleman and fight the battle for you. 

Is fighting this worth your time?

Hoas are constantly screwing us owners and were fighting back.

You will be fighting the same 200 other privy users here in town for the same deals (gold/silver) all the time.