When the sellers really don't want to sell. Personally with over 25 years of experience behind me I can say with some authority I've never once seen a lease option be anything more than a lease. In most instances I find these are extremely savvy sellers preying on much less savvy buyers and they never intend for the buyer to successfully meet the terms fo the contract and plan on taking the house back after getting the buyer to pay them well above average rental rates. If by chance the buyer does manage to somehow meet all the terms of the contract the Seller is OK with it as they got well over market price for their home.
The only other lease options I've seen are when the seller cannot get the house sold in any other manner.
There are some other excellent answers below for you and your clients to consider.... more