Being a landlord is a business. Treat it any different and you will get burned. period.. end of discussion. We charge a $500 per pet refundable ( if no damage) deposit. Don't like it? that is OK, you just are not renting from us. Surprisingly, we return most of the pet deposits in full. When they put up that amount of money, they want it back and properly manage their pets!
How much pet deposit did he give you? How much other deposit? Is it enough to cover the damages?
How long ago did he tell you that he would start looking for another place? (called actual notice) If it was in the middle of last month-- that means he has given you a 30 day verbal notice..... does your contract say written notice or just notice?
Sounds like you may have to let him pay the 1/2 months rent and get him out