Is there anything I can do to help myself in this awkward pet/lease situation?

Try to make this short. I live in a house with three roommates – two of them are a married couple and the other one is my ex boyfriend. We broke up a few months ago and I live in the living room. That sounds awful but its beside the point – it isn’t great but its not terrible either since we get along and had a fine breakup. My roommates have two dogs and even though the Craigslist ad said no pets my landlord allowed the dogs to live here because they had a reference, their old landlord who said the dogs were well behaved and wouldn’t cause any damage. The one dog pees on the carpet when he’s excited but other than that they are pretty good.

Basically we have two cats and did not claim them when we signed the lease. Long story short my landlord was here yesterday and found out we had the cats. Today he told us that our rent was going up $100 per person and my ex and I both have to give him a non-refundable $550 deposit each to protect against the cat damage. There will be no cat damage. They are well behaved cats, both fixed, and they do not spray.

I am beside myself. I thought he might want one or the other, but both I feel is a little ridiculous. I am really upset, and don’t have $1000 to throw down the drain over the next couple months. Yes, I realize we were dishonest. But I feel like he is being a little greedy. Can I do anything? Can I tell him I disagree with his terms? Is that obnoxious? I really don’t know what to do. Any input is greatly appreciated. Thanks.