Only you can answer the question of what you should do. Clearly they are in violation of the lease. Assuming they won't get rid of the dog, you can either: 1) Evict them 2) Allow them to keep the dog. You have to determine which is the best business decision for you. Evict them and have to hunt for a new tenant or let them keep the dog and put up with the damages a pet makes. Lighthope Pearls of Wisdom - The secret of success is honesty and fair dealing. If you can fake those, you've got it made. - Groucho Marx
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