The fact that they haven't signed the releases and that they haven't relinquished commercial control to you doesn't mean that you don't own the photographs... it just means that you can't use them for private gain until you're given permission to do so.
Think of it this way... picture this... you to take a photo of a random guy on the street. You like the photo, but he refuses to sign a release form. There's nothing illegal about you possessing that photo... you just can't really use it for anything. See what I'm saying?
Your clients absolutely don't own any rights to those photos... you do. It's just that, if they won't sign a release, you probably shouldn't use them for ANYTHING, even non-commercial display, just in case. Now, whether or not they'd like to buy prints relies on them giving you commercial control, in the form of a release, which allows you to legally sell their pet's likeness in those photos... to the client, on stock agencies, whatever.
Basically, the above is incorrect and/or incomplete information, except, "The fact that they haven't signed the releases and that they haven't relinquished commercial control to you doesn't mean that you don't own the photographs...' and "Your clients absolutely don't own any rights to those photos... you do."
I suggest you start here:
Model Release Primer
And then get Dan's book:
A Digital Photographer's Guide to Model Releases.
I'm not claiming to be a scholar on photography law... I'm certainly not. But I would say that the above line of reasoning is what I would follow given the scenario of the OP. My line of reasoning wasn't really meant to be a primer on photographic law, either... it's a line of reasoning that can simply be used to try and cajole the OP's clients into signing the releases.
I'm sure that this way of looking at it wouldn't hold up in the court... but if the line of reasoning works and achieves the desired result for the OP, it won't have to.
The fact of the matter is that, under ordinary circumstances, the client would've been asked to sign the release form before the shoot even occurred. Being an incidental occurrence, I figure that a bit of sensible-sounding logic, while perhaps not textbook law, should nip this one in the bud for him.
Though I'm sure that reading up on the laws would be beneficial to him in the future, anyhow.
Out of curiosity, what have I got wrong? In general, I mean. Is it: "it's just that, if they won't sign a release, you probably shouldn't use them for
ANYTHING, even non-commercial display, just in case."? I suppose that in terms of releases, since I don't usually need them or use them, I would err on the safe side and not use a single likeness of someone or someone's property unless I had a corresponding release. It just seems like a risk to me... but I suppose that I might perhaps be entitled to use the photos according to law? I've heard of "journalism" photography being free of this limitation, but it also just seems like a risk for an individual to take if they aren't sure... at least, a risk that I wouldn't take if it could possibly mean me having to pay a lawyer to save my a** in court.