Lease options ARE NOT illegal in the state of Texas. Bruce is partially correct in that there's legislation that regulates what and how a lease to own transaction works, and I'm sure there are some bad people taking advantage of others. Having done several of these deals, I can ensure you I'm not one of them.
Chris, to sum it up for you, all paperwork that deals with the eventual purchase of the property has to go through an attorney (paid by an investor). I have done several "Lease Option" deals, and when done correctly, is a win-win situation for all parties involved. You get the property you want quickly, you work with someone to repair credit, and you get counseling on becoming a homeowner. If you end up not purchasing the property after a set amount of time (typically 2 years), the most you lose is a deposit which is considerably less than a down payment than previously mentioned. However, there are proper steps that need to be taken, and if you are interested in getting on the road to homeownership then you can learn more about the program here: http://www.houstonicon.com/Lease-Option
There is definitely a right and wrong way to do a lease option. You need to align yourself with someone like myself who has handled several successful lease option transactions. We want to counsel you and get you in position to purchase a home for yourself. Some of these deals have worked out well for some and haven't for others. The road to home ownership starts and ends with you the buyer. Professionals can only show you the right direction to get there. In the end, it is totally up to you to dedicate yourself, stick with the plan, take a professionals advice, and make it happen. Chris, I hope to speak with you sometime soon to properly educate you on this topic.... more