In the event of default, they can exercise their rights against the owning LLC/entity that owns the collateral.Those are the most common I have seen.

Later the tenants turned into tenant-buyers and then exercised the option a year later.

If nothing else its a good exercise to learn your desired market and help you spot a deal when it comes by.  

It is often overlooked, or not exercised by realtors but the contingency is there; and per the terms of your contract is most often not met, but again the clause is usually not exercised.

I'm sure many have huge restrictions and regulations on landlords as many are former/current Communist countries.My analysis after this interesting exercise is as always...Real Estate is hyper local.   

Structure the basics like this:A - Price agreed to.B - Option Period:  Number of years the option is in play.C - Two Way Option:       1 - You as Buyer have exclusive right to buy during Option Period     2 - Seller can exercise an Option to NOT sell. 

Matthew John:I would echo what Dylan Tanaka stated earlier in the thread...Looking for properties on MLS and Zillow and such is probably an exercise in futility.  

There is a due on sale clause in the loan docs but banks rarely exercise them. 

I'm going to exercise every option I have to see what's the best move here (more to come).There's still some outstanding items I need to finish up so that I can place a pending tenant.

However, there is much varied opinion as to the degree to which banks/lien holders try to prevent this by exercising the due on sale clause of the loan and on how difficult it may be to find insurance.