USING A PET DEPOSIT FOR NON-PET DAMAGES

Occasionally a manager will be faced with that unfortunate situation where a resident who has an authorized pet, signed a pet addendum and paid a pet deposit, vacates owing rent, has damaged the premises, but none of the damage is pet related. It is extremely difficult for the manager to accept that the resident may be entitled to a refund of the pet deposit, in light of all the other money that is owed by the resident who breached the lease agreement. Unless the manager has structured the deposit agreement the correct way, the manager has no choice but to refund the pet deposit. Having to return a pet deposit to a resident who owes you money, or worse yet, a resident who was evicted, can be frustrating indeed. The problem can be solved simply by proper lease and/or pet addendum wording.

Collecting a Pet Deposit - A pet deposit is by its nature refundable. All “deposits” are refundable, while fees are non-refundable. If something is designated a pet deposit with no other qualifying language, that refundable deposit is for pet damage, and in the event there is no pet damage, the deposit gets refunded. There is no such thing as a non-refundable pet deposit. This is an oxymoron, since all deposits are refundable. If the manager collects a pet deposit, this amount must be kept in the same account that the manager keeps the security deposit or any other advanced rent, and the deposit is treated the same as a security deposit. The deposit cannot be used by the manager while the resident is residing on the premises, unless the resident specifically agrees in writing that the manager is permitted to use this money.

Collecting a “Pet Fee” – A pet fee is an amount paid to the manager for the resident to have the privilege of having a pet on the premises. Once paid, this fee belongs to the manager at the time of payment. It is never refundable, as it would then be a deposit.

Should you collect a Fee or Deposit? – We recommend collecting both a pet fee and a deposit, as there is a high likelihood that even if there is no obvious pet damage, the unit will have fleas which will become evident 1-2 weeks after the residents and their pet(s) vacate the premises. As most pet owners do not believe that their pets have fleas, but most managers know what occurs when a pet is taken from the premises, and the flea eggs hatch and do not have an animal on which to live, there is an almost guaranteed problem and dispute with the resident when the resident is told that he or she will be charged for flea extermination. Since the damage to the premises could be more substantial than just a flea infestation, taking a deposit in addition to a fee is advisable.

The Pet Addendum problem – Most pet addendums simply make a statement that there will be a pet deposit or a pet fee which will be used for pet damage. Even if it does not specifically state that it will be used for pet damage, there is an implication that a pet deposit will only be used for pet related damages. This prevents the manager from using the money for anything other than pet related damage.

The easy solution - In your lease or pet addendum, there needs to be a sentence similar to this: “The pet deposit may be used by management/manager for any damage related to the pet(s) and for ANY other monies owed by resident under the terms of the lease and for physical premises damages, whether pet related or not”.

As you can see, this clause allows you to use the pet deposit for non-pet related damages or other monies which the resident may owe. Some property managers avoid the pet deposit issue altogether by simply charging a higher security deposit which can be used for any monies owed under the lease terms. If you make a decision to charge residents with pets a higher security deposit, make sure that it is clear that the higher security deposit requirement is due to the fact that the resident has a pet. One of our clients was wrongfully charged with discrimination when a fair housing tester who was a member of a protected class was quoted a higher security deposit by the manager, and another tester who was not from a protected class was quoted a lower deposit. On its face, it appears that discrimination had indeed occurred, but the facts showed that the first tester stated that they had a pet, and the manager upped the security deposit accordingly due to the pet. The second tester did not mention the possibility of a pet and thus was quoted a lower security deposit.