Should Landlords Require a Pet Deposit?

When renting out your space, you’ll likely come across a great tenant that wants to bring along their beloved four-legged friend. Should you require a pet deposit? 

Landlords should always consider the financial benefits of allowing pets. By requiring a pet deposit, charging pet rent, and ensuring that you are covered with insurance, you can be proactive when it comes to mitigating any potential damage pets can cause. 

As a landlord, it’s important to educate yourself about pet deposits and their benefits. We’ve got you covered! 

Here’s everything you need to know about pet deposits — whether you should require one, what it is used for, and other costs associated with allowing tenants to have pets.

• What is a Pet Deposit?
• How Much is the Average Pet Deposit?
• Are Pet Deposits Refundable?
• Alternatives to Pet Deposits
• Is it Legal to Charge Pet Rent and a Rent Deposit?
• Final Thoughts

What is a Pet Deposit?

A pet deposit is a payment required upon lease signing that is used to cover any damage to the property that may be caused by the pet. Pet deposits help to alleviate the financial burden of any damage that a pet causes in the unit. 

A pet deposit is a separate payment that the security deposit doesn’t include. However, they’re similar. 

A pet deposit is meant to be returned to the tenant once their lease term is up. That’s the case if the landlord doesn’t find damage beyond normal wear and tear.

It’s important to remember that under federal law, landlords cannot charge a pet deposit for service animals under the Fair Housing Act.

How Much is the Average Pet Deposit?

The amount that you, as a landlord, are allowed to charge for a pet deposit depends on your state’s laws.  

The laws regarding pet deposits vary by state. Only a few states have laws that specifically pertain to them. 

Be sure to check your local laws before requiring a pet deposit. That’ll help you to ensure that you aren’t charging more than the legal limit. 

Typically, the average one-time pet deposit is between $200-$500. However, there are many factors that affect the amount you charge for your pet deposit. It doesn’t have to be a static number. 

The size of the pet, the type of pet, and the value of your property are all things that you should take into account before coming up with a final charge. 

For example, you might charge more for a larger dog breed than you would for a common house cat. That’s because they have an increased ability to cause damage to your property. 

However, it’s important to remember that according to the Fair Housing Act (FHA), you cannot restrict service animals from your unit if you have a disabled tenant. These animals are highly trained and aren’t likely to cause damage to your unit.

Are Pet Deposits Refundable?

Yes! Pet deposits are meant to be refunded to tenants once their lease term has ended. That’s the case as long as the pet hasn’t caused any significant damage to your unit. 

It’s important to have an established protocol for evaluating any damage to a unit regardless of whether a pet has caused it. 

How to Accurately Record Any Pet Damage to your Property:

1. Take time-stamped pictures of the unit prior to moving a new tenant in. Ensure that you get high-quality images of every inch of the unit. 
2. Once the tenant has moved out, take another set of time-stamped pictures of the unit. If you notice any damage, be sure to take multiple pictures of it.
3. Create an itemized list of the repair costs of the damage and get the total cost of damages.
4. Notify the tenant of the damage caused. Let them know that you will be withholding some or all of their security deposit or pet deposit.

In many cases, you’ll be able to refund pet deposits with no trouble. Most tenants love their pets and understand that they’re responsible for any damage they cause. Most people are proactive when it comes to preventing it!

Alternatives to Pet Deposits

A pet deposit isn’t your only option when it comes to ensuring that you protect your property and your wallet against any damage that pets cause. 

Here are some alternatives to pet deposits for the savvy landlord:

1. Pet Rent

Pet rent is an additional fee that landlords tack onto the rent to cover the cost of having a pet. This fee isn’t refundable. 

Pet rent can range from $50-$200 a month. On average, landlords can expect up to $2,400 in additional income on a yearly basis from pet rent alone. 

Some landlords may increase this amount by charging per pet as opposed to a single fee for all pets. If you choose to charge pet rent, be sure to do your research on local rent rates. You’ll want to keep your unit competitive. 

2. Pet Fees

A pet fee is a non-refundable fee that is charged to tenants either at the time of lease signing or when the tenant gets a pet to cover the cost of having a pet. 

This is a one-time fee that isn’t meant to cover the cost of damages caused by the pet. It’s typically the same price as a pet deposit. That’s anywhere from $200-$500.  

It’s important to note that some states prevent the use of security deposit funds to cover the cost of any repairs for damage caused by a pet. In short, a pet fee should be high enough to cover any common forms of damage that that type of pet would cause.  

3. Pet Clause in the Lease

The lease is the most efficient way to ensure that you cover all your bases when it comes to allowing pets in your unit. Including a pet clause in your lease agreement can ensure that your tenant is legally obligated to follow any restrictions on pets that you might have. 

For example, some landlords restrict certain dog breeds and weight classes. They may only allow a single type of pet. 

It may be in your favor to require proof of obedience training to ensure that the pet is well-trained. You can also require a recommendation letter in the clause. That can help verify that they’re responsible pet owners. 

4. Require Renter's Insurance

Renters insurance is a great way to alleviate the burden of covering pet damage from landlords. Many renter insurance policies cover pets. The things they may cover a range from dog bites to property damage that the pet causes. 

If your tenant has a policy that doesn’t cover pets, you may require them to obtain pet liability coverage. That’ll cover injuries and property damage a pet causes. 

There are also “umbrella policies.” Those have renters insurance and renters pet insurance rolled into a single policy.

Is it Legal to Charge Pet Rent and a Rent Deposit?

It is completely legal to charge both pet rent and a rent deposit. However, you must keep the total deposit, security and pet, below the legal maximum for your state. 

For example, New York limits security deposits to one month’s rent. If the monthly rent for your unit is $1,000 and your security deposit is $700, you cannot charge more than $300 for your pet deposit. 

Don’t forget that you can’t use a security deposit to cover pet damage if you also require tenants to pay a pet fee or pet deposit. It may be more financially beneficial to charge pet rent alone. 

Then, you could use the additional fee to cover damage that pets may cause. However, this might not be a viable option in very competitive markets.

Final Thoughts

Above all, landlords are required by law to adhere to the rules and regulations that they’ve outlined in their lease agreements. That’s why it’s imperative to be educated when it comes to furry four-legged tenants. 

Remember, the FHA protects the rights of disabled Americans. It includes a clause that prevents landlords from banning service animals or charging tenants a pet deposit to keep them. That applies regardless of their policy. 

If you do choose to charge a pet deposit and it’s legal in your state to do so (check local laws!), be sure to assess the financial implications. Charging separate deposits may limit the amount you can use to cover pet damage. Some states prohibit using security deposit funds to cover pet damage if you charged a pet deposit, as well.

Consider charging a security deposit and a competitive monthly pet rent fee. That can help you to maximize your income and protect your property. 

Be sure to make an informed decision when it comes to pet deposits and your rental units. Happy renting!