It really depends on the terms written in the "rent to own" or "Lease with option to buy". In my lease with options, the money is non-refundable, so I tell my tenants only to enter into a lease with option if you know that you want to buy the house.
This is what I give to potential "lease with option to buy" tenants;
Lease With Option to Purchase Explained
Typically, the details of the sale of the house have been predetermined (sale amount and future closing date), all we are doing is delaying the closing until a time better suited for the buyer.
The buyer pays $2000 (two thousand dollars) in consideration of the option to hold to price of the house. Any appreciation up until closing would be the buyers (not the owner). This option money is not a security deposit nor is it under any circumstance refundable. It will only be applied in the form of a down payment at closing. Buyer can close anytime within the lease period, with no penalty.
Property taxes are paid by me (the owner of record) until you close on the house. The maintenance, however is your responsibility. I thoroughly go over each house before a lease with option to make sure there are no current problems (if there are, I fix them before we enter into the lease with option).
When rent is paid on time (by or before the 1st of each month) Landlord agrees to apply $200 per month as a "landlord's Consideration" towards the purchase of the house, up to a maximum of $2400 (12 months X $200). If tenant does not purchase house within the time frame agreed upon, none of this money will be paid. If purchaser obtains financing prior to the end of the contract, there will be no penalty & all monies paid under the Landlords Consideration towards the purchase of the house to date, shall be paid to the purchaser at closing.
Security deposit is paid as with any lease. If you buy the house, it is also applied to your down payment at closing. If you change you mind for any reason, the security deposit will be used to cover any unpaid rent, late fees or damage until termination of the lease.
So, to recap, a lease with option gives several benefits to the buyer when fulfilled. In this area, typically houses appreciate. Any appreciation is the buyers, not the seller. This time also allows the buyer to; 1) clean up credit, 2) payoff any outstanding bills, lowering their debt to income ratio, 3) allows buyer to sell current home to use equity in the new purchase, 4) build up their downpayment on the new home.
The down side; if you do not buy the house, you lose your $2000, so only do a lease with option if you know you will be buying the house.