In the St Louis area, the lease purchase is negotiated twice first as a contract to purchase and at the same time as a contract to lease. Each deal is set differently based on what the buyer and the seller agree to - some have nothing going from the lease toward the purchase, others have a lot going from the lease to the purchase. Most have the security deposit transfer into the earnest money. Typically they are set so if the buyer/renter defaults on any of the monthly rent payments he/she is kicked out right away and the purchase contract is then voided and the security deposit forfeited. The loan commitment and appraisal dates are typically set in the future (a month before the closing date) but the building inspections, title, survey, insurance checks and all other option/contingency type details are done BEFORE the buyer ever moves into the home as a renter so a base line is established. As a renter, the buyer has to take care of the property and the owner has to as a landlord maintain the property. HOmeowner insurance is the owners responsibility but the buyer has to have renters insurance. The terms of the contracts can set the period of the rental for any time period that is agreed to by both sides (3 months, 6 months, a year - very seldom do they go longer than a year), at the end of the rental period the purchase contract is in effect and the buyer is under the legal obligation to buy. Since almost no bank will give a loan preapproval out that far, the agents involved will try to work with a lender they have a good relationship with and have that person guide the buyer through correcting the problems in their credit report, correcting debt issues, etc to be able to get to loan commitment. The seller is taking a real chance with a lease purchase that the buyer is really going to be able to buy at the end of the rental period (the majority of the lease purchase contracts never make it to closing because the buyer still can't get a loan because they still haven't corrected whatever the problems are that they have suppposedly been working on during the lease period), plus the appraisal is done with the loan commitment right before close, and in a down market the seller runs the risk that the home's value will decrease while the buyer is living in the home. They also run the risk that the buyer will tear up the home and they will have to spend money fixing it up again before they can put it back on the market once the buyer has moved out (and issues if they have to evict the buyer/renter because they don't pay the rent). For the buyer there are far fewer risks, but there is always concern that once they are in the home and see the home's normal "warts" they will change their mind. Sellers typically want to see credit scores and a preapproval letter from a mortgage company PLUS they will want to talk to previous landlords, do a background check and a criminal check just like regular apartment rental agencies do.
In a rent to own, you go through a similar situation as I've described above, but you pay a much higher rent payment each month until the home is paid for and you live in it as a tenant until the final payment. The current owner typically is holding the mortgage on a rent to own, and they have the right to ask you all the same questions that a bank asks you.
Taxes and insurance are an issue as well in both these situations and the current owner would continue to hold the title.