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can the agency use it for the same unit (new client)? or does the agency have to use that security deposit for the original client and landlord #2?

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If the recipient is the leaseholder with the original landlord, the original security deposit paid to that landlord may remain with that unit so long as the lease continues to remain in place between the recipient and the landlord (even if there is a new participant subleasing the unit from the participant).