Refundable vs. Non-refundable pet deposits
I have a renter who wants to get an outside dog for protection because her boyfriend is going to be working out of town off and on. I'm going to agree to this after meeting the dog and getting a $500 additional deposit, on top of the $500 they've already paid.
I have a friend who says this pet deposit should be non-refundable. My thinking with this is that this essentially gives the renter subconscious permission to let the dog to $500 worth of damage - "Fido's scratching up the back door, but that's OK because I've already paid $500 and it won't cost that much to repaint it."
To me, it makes more sense to make it refundable, and that way the more damage they prevent the dog from doing, the more money they get back.
So, refundable or non-refundable?
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@Jim Bentley if it's "non-refundable" then it's a pet fee. If it's refundable it's a pet deposit. Deposits are tenant funds held in trust. Some states have limits on total amounts of deposits. Change your vocabulary. Money you keep are fees or rent. Money that can be returned subject to conditions of the lease is a deposit.
I would also charge pet rent. $25 per month per pet.
Finally know this, that dog will be inside your property.
Refundable. In some states, non-refundable deposits are not allowed.
And if it IS non-refundable.. then what is it for anyway?? Just for allowing the pet to be on the property? Deposits are supposed to be used to repair tenant damge. No damage = give back the deposit.
@Mark Thanks; that's exactly what I'm thinking (No damage=give back deposit). But the guy I'm talking to has always done pet deposits as non-refundable, and he's adamant about it, so I was curious about other people's opinions. Good point about checking state rules.
I have always done non-refundable. for tenants who have multiple pets (i had one tenants had 4 pets total, dog and cats), we do 500 non-refundable, and 500 refundable. for the refundable part, at the end of the lease if there's no damage, deposit back.
And I request reference, and consult with insurance expert on the pets breed, making sure it's not the aggressive type, have good background/history and house trained, etc.
Also, I advertised as deposit is per pet, but if they have multiple, it's always a case by case basis, I want to get as much information as possible about the pets first, and then negotiate a agreement with the tenants.
@Jim Bentley if it's "non-refundable" then it's a pet fee. If it's refundable it's a pet deposit. Deposits are tenant funds held in trust. Some states have limits on total amounts of deposits. Change your vocabulary. Money you keep are fees or rent. Money that can be returned subject to conditions of the lease is a deposit.
I would also charge pet rent. $25 per month per pet.
Finally know this, that dog will be inside your property.
Yep. I agree with Bill's comments.
1) Just call it a pet fee and make it non-refundable. I just started doing it at the beginning of the year because every single tenant that wanted to rent our houses seemed like they had a dog.
When I go over that its a pet fee and is not a deposit and not refundable, very few question it. The one or two that did, I give them the following response.
The fee is for the additional wear and tear on the house. So while a pet may not do damage to the house for something that can be reimbursed for, they are definitely adding wear and tear on the house.
2) The other option there is to raise the rent. You can do that too. Thats basically a way of getting the pet fee and getting around any issues with local laws if they prohibit pet fees or something.
But I have yet to see a tenant balk at paying the non-refundable pet fee although I only charge $300 a pet. Yours looks like a $1,000 total which does seem a bit high as a pet fee. Then again, its your house. They can either pay it or not.
You are taking a risk with having an "outside dog" for security as that tends to equate to a larger dog that could pose some risk to your insurance....