I was leasing a basement of my home to a single mother and her 2 year old daughter, utilities included. All she had to pay was one rent fee per month. It states in the lease that the terms are on a month-to-month basis. There were some issues with her boyfriend (he was sleeping/living there every night) and when we told her rent was going to be going up in 30 days because of their violation of the lease, she decided she was moving out. She moved out in the middle of the month and asked for her money back for the remainder of the month.

Because the contract states that the space was rented on a month-to-month basis, I, as the landlord have the right to keep the remainder of the rent, correct? Because I never told her she had to get out of the house, she decided on her own that she was leaving the space?

Also, there was no security deposit collected, and there is quite a bit of damage, holes in the walls from hanging frames/curtains, etc. (Space had been freshly painted and carpeted when she moved in). She also put holes in the wooden trim around the windows because she didn't know how to hang the curtains properly. How can I deal with the damages done? Do I just submit an estimate from the contractor and if so, can I use the remainder of her rent money to pay off that repair?

I want to do all of this the legal way but I don't want to give her money back because she had her boyfriend living there for 3 months, rent free. Is there any way to get money for that?

First there is no refund of rent, you keep all for the rent, since rent is payable for the month, Then you bill her for any damges since for some reason you did not ask for a security deposit??

Of course she was paying rent, was there a specific clause that boyfriend can not or some other person can not stay there.

She was required to give you a month's notice. So she was not entitled to any refund. You can sue her for the damages but I doubt if you will be able to collect.

Next time get a security deposit.