" The contract states 'deposit held until termination of contracts' (so I can understand how she has misunderstood and thinks she gets it back, but that misunderstanding is surely her problem, not mine,-she should have read all her paperwork correctly, not just that one sentence?). 'Deposit held until termination of contracts' does not mean that it is returned to the parent."
If you can understand why she believes the deposit should be paid back then you agree that the contract is ambiguous which hardly helps you does it?.