Even well-behaved pets can scratch up floors and walls, and dogs and cats can leave behind fur, dander or worse that you have to clean up when the tenant moves. A pet deposit is like insurance for any damages the pet may cause if the landlord fears that the damage may surpass the amount covered by the security deposit. It can be paid as a small monthly amount on top of the normal rent or as a one-time deposit on move-in, like the security deposit.
However, you may want to take a different approach, and you may be curious to know whether alternative set-ups for handling pet deposits are legal. Read on, but be aware that laws may vary in your state or municipality, so it's always a good idea to check your local regulations.

Pet Deposits
Laws around pet deposits (as a one-time fee, usually paid at the same time as the security deposit) vary substantially from jurisdiction to jurisdiction. Some states (like North Dakota and Delaware, as of this writing) explicitly allow them, and few if any ban them outright.
By definition, all deposits are refundable. If the pet has incurred no damages that you must pay for on move-out, you're legally obligated to refund the entire pet deposit to your tenant.

Pet Rent
Pet rent is sometimes described as a pet deposit, but it's actually a small quantity of money paid on top of normal rent every month, to cover any damages. (It may a flat fee, or it may be paid per pet.) Some landlords (and tenants) find that this set up makes more sense than a deposit—after all, the longer a pet is on the premises, the more likely it is to cause damage that needs to be paid for. So a pet that lives in your unit for three months, and only does three months' worth of damage, costs your tenant less money than a pet that lives in the unit for a year.
Because of how pet rent works, your tenants will never see any of that money back. It may be illegal in your jurisdiction to charge too much pet rent. Even if it's legal, if your pet rent is particularly high, your tenants might figure out that they're paying a lot of money that they will never see again. So do your best to keep your pet rent as low as you reasonably can, to keep your tenants happy.

How Much to Charge?
Many states impose a limit on how much you can charge for a security deposit, usually on the order of one or two months' rent. Check your local laws, but generally any pet deposit paid at or before move-in counts toward this security deposit limit.
The primary problem with requesting a special pet deposit is that you cannot use the pet deposit to pay for non-pet damages. In other words, if your tenants trashed the unit so thoroughly that the security deposit won't cover damages, you cannot use the pet deposit to pay for it. You may decide on the pet rent option, so that you have more leeway on how the deposited money is spent.
You're within your rights, in most places, to charge a different amount for pet rent or pet security deposit based on the animal. You might ask to meet the animal(s) before your tenants sign the lease, so that you can get a feel for how well-behaved the animal is.

Exceptions to Pet Deposits
In general, pet deposits are most typical for mammals like cats and dogs. Many landlords and property management companies do not charge pet deposits for other animals, like fish, reptiles or even rodents.
Keep in mind that it's illegal to charge a pet deposit for service animals, as that's considered a form of discrimination. Damage is unlikely in this case, as service animals are well trained and tend to be well behaved.

Cover Your Bases
Pet deposits, pet rent and other fees are some of the best ways to make sure you don't lose money thanks to a disobedient animal. It's generally a good idea to charge a pet deposit or other fee, and most tenants are understanding of this.
To keep the deposit as low as possible, do your best to make it as easy as possible for tenants to make sure their animals are obedient and well cared-for, so that they don't destroy your property. You might choose to point out nearby walking routes for dogs, so that the animals are well exercised and less likely to make messes or destroy property. Taking steps like these serves another purpose: you've made it entirely clear that you've done what you can on your end to contribute to the pets' well-being. Your tenants will never be able to say that you didn't give them useful information about emergency vets or other useful resources.
According to research by FIREPAW, about 70 percent of tenants have a pet, and vacancy rates are lower when landlords allow pets. If you're ready to deal with the potential problems pets can cause, allowing pets in your units may be in your best interest. You can head off potential money loss from resulting property damage by charging pet deposits or pet rent, but keep the above advice in mind, as well as state and local laws.

POSTED November 12 2015 11:44 AM

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