Bounced Security Deposit but Assisted Rent Check Deposited

[Greg Laforge]

Hello,

I've recently signed  a lease with a new tenant. I made the mistake of accepting a personal check for the security deposit. I now know never to do this, please spare me and help with my current issue at hand. The check for the security deposit bounced. However, they used an assistance program to pay for the first months rent. This of course, did not bounce. I haven't given them the keys yet. We are about 25 days into the lease, can I terminate the lease due to them not paying the deposit as agreed in the lease even though I have 1 months rent deposited? Can I just return the first months rent to the respective program  (or maybe I'm entitled to it?)

Any help would be greatly appreciated. I understand nothing said is legally binding. 

Thanks,