## Facts

- Remco Enterprises, Inc. rented consumer electronics under “rental with option to purchase” agreements that allowed the customer to terminate by returning the property; Remco agreed to maintain the items during the rental period.
- Alice Houston, a low-income single mother, entered two rent-to-own agreements in September 1980: a stereo (69 weekly payments of $12) and a console color television (104 weekly payments of $17).
- Houston completed all stereo payments, and ownership transferred to her in January 1982.
- For the television, Houston stopped paying with 36 weekly payments remaining; she made her last payment on January 23, 1982, and kept the television without returning it.
- Remco sued for possession of the television and past-due rental payments.
- Houston counterclaimed alleging (1) violations of the Truth in Lending Act (TILA) and (2) unconscionability under the Kansas Consumer Protection Act (KCPA), emphasizing that total payments would greatly exceed the television’s value.

## Issues

1. Whether the rent-to-own television agreement was a “credit sale” under TILA requiring credit disclosures.
2. Whether the television agreement was unconscionable under K.S.A. 50-627 based on price disparity and Houston’s bargaining position.
3. Whether the trial court erred by awarding Houston ownership of the television without completion of the required payments and by denying Remco possession and contractual remedies.

## Decision

- Affirmed the denial of Houston’s TILA counterclaim because the agreement was not a TILA “credit sale.”
- Affirmed the denial of Houston’s KCPA unconscionability counterclaim because the agreement was not unconscionable.
- Reversed the portion of the judgment declaring Houston the owner of the television free of further obligation.
- Remanded for further proceedings to grant relief consistent with the contract, including Remco’s right to possession and any appropriate contract remedies.

## Legal Principles

- A rent-to-own agreement that the customer may terminate at any time by returning the goods, without a continuing obligation to pay, is generally treated as a lease rather than a TILA “credit sale.”
- Under the KCPA, unconscionability requires more than a hard bargain or price disparity; the question is whether the terms and circumstances are so one-sided and oppressive as to be excessively unreasonable.
- When a contract unambiguously conditions transfer of ownership on completion of all payments, a court may not award ownership to the customer absent full performance where no statutory violation or unconscionability is found.
- Where the customer has not completed required payments and has not returned the property, the seller may seek possession and contract-based relief consistent with the agreement.

## Conclusion

The court held that the rent-to-own television agreement fell outside TILA’s credit-sale provisions because Houston could terminate by returning the set, and it was not unconscionable under the KCPA despite a high total cost. Because ownership transferred only upon full payment, the trial court lacked a basis to vest title in Houston without completion of the payment schedule, and Remco’s contractual right to possession and related remedies was reinstated on remand.


Remco Enters., Inc. v. Houston, 677 P.2d 567 (Kan. Ct. App. 1984)