We ask questions that quickly determine whether the owner is a "dog person" or not - who is the dog's vet, where do they take the dog for exercise, etc.

However, if I don’t exercise my option, I would notget that money back.

(Or lose all of their non-refundable $26,600 if they choose not to exercise their Buy Option)?

The idea is that as well as a normal Lease, a SEPARATE "Option to Buy" Contract would operate concurrently, which would comprise an agreed Purchase Price and NON-REFUNDABLE earnest deposit that would be put towards that purchase price IF they exercise their Option at the end of their normal Lease.

Every morning she wakes up telling herself she is going to exercise and stick to her diet.

Make sure you can cash them out and exercise. 

Your lease option agreement with the seller should be clear that you have the right to exercise the option to purchase at anytime and therefor so does your TB.

I wrote all this as an exercise for myself, but I hope it's a high-view help to you.

The tenant/buyer paid a large non refundable deposit to move in and if he decides not to exercise his option to purchase, oh well.

You've usually got to step outside the forums to really exercise that fully.