If you forfeit the option, then it becomes a deduction.

(not sure what I think of that) If they are approved and then refuse to rent the dwelling, the deposit if forfeited.

They forfeited their deposit and we moved to the next tenant.

Sure, they can leave, they simply forfeit that money.

It the option expires then the consideration is forfeited and your option consideration becomes a short term capital gain.

If the story can't be backed up, then she'd probably be looking at late fees, eviction notice and forfeiting rent.

Here's a section on payments due landlord for early termination (basically says all rent is still due) :If the tenant fails to pay the rent, breaches the terms of the Lease, becomes bankrupt, or abandons the unit: (1) The Landlord may immediately cancel this Lease, and shall become entitled, without any further notice to the tenant, to immediate possession of the unit; and (2) All rent under this Lease shall immediately become due and payable, and the security deposit forfeited; (3) The Landlord may sue to dispossess the tenant; and(4) The Tenant shall be responsible for all legal fees and court costs incurred by the Landlord as a result of Tenants’ breach of any term of this Lease Agreement.That being said, I would deduct from their security deposit any amount that would fulfill the 30 day notice.

Even now there are SFH available as tax forfeited properties for a couple thousand dollars.

You could send a notice of violation and that the deposit is likely forfeited, or somehow ackowledge that you know and there are consequences. 

If you miss your deadlines, you could forfeit the right to be paid for those repairs.