Property Management Education

Why You Should Never Charge a Pet Deposit

System - Wednesday, January 10, 2018

Rental property investors often come to us with questions regarding renting to tenants with pets. Landlords and even property managers sometimes fall into the trap of charging a separate pet deposit, when the reality is an additional pet-specific deposit is not in the best interest of the property owner.

Let’s look at an example. You have a prospective tenant and they have a pet. You allow pets in your rental property, but decide to tack an additional $500 pet deposit onto their move-in costs, along with the standard $1,000 security deposit. When it comes time for the tenant and their furry friend to move out, you discover significant damages. They’re late on rent, left a hole in the wall, and owe you for utilities. Conveniently, all of these charges come out to the exact amount of your $1,500 security deposit.

Here’s the catch. If none of these charges were a direct result of the pet, you are obligated to cut that bad tenant a check for $500, returning their pet deposit you charged at move-in. You’re then left footing the bill on the extra $500 in charges before you can get the property turned and ready to rent again.

To avoid the circumstance about, we encourage rental property investors to raise the security deposit amount when renting to a tenant with pets. That way if there are damages at the end of the lease, pet-related or otherwise, you can keep whatever you need from the deposit to cover the damages without being restricted to separating out the pet deposit from the overall security deposit.

Additional questions we often get on the topic are:

  1. Can I charge a non-refundable pet deposit?
    No, the terms 'non-refundable' and 'deposit' are contradictory. Either you charge a deposit or a non-refundable fee. Deposit means refundable by nature, therefore deposits must always be refundable. 

  2. Can you charge an additional security deposit for a service animal?
    You absolutely cannot; under HUD guidelines, service animals do not qualify as pets. Talk to a professional if you have a prospective tenant with a service animal. 

As always, the Grace Property Management team is here to serve as a resource. If you have additional questions about how to handle pets in your rental property, or any other questions about operating an income property, give us a call. 303-255-1990

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